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Switch to fixed rate?
sismith42
Posts: 102 Forumite
We all know that the BoE base rate won’t stay at 0.5% forever, and that even if it somehow does stay there for ages, lenders’ SVRs may well creep up anyway.
What I’m trying to figure out is whether this increase is likely to happen soon enough to make a two-year fixed rate mortgage a better bet than the current SVR we’re on... and I keep going back and forth in my mind on which is the better option!
We bought in Jan 08 at 100% LTV (I know, I know) on a discounted SVR tracker. We’re now just under 95% LTV, and the options are staying at our lender’s SVR (currently 5.19%) or going to a 2 year fix at 4.99% with a £499 fee (which we will pay out of pocket, and if we don’t switch, we’ll use that money as an overpayment).
Based on the MSE’s calculator thing, If rates don’t move for the full 27 months*, we will be £148 the poorer. If rates rise by only 0.1% over the entire period (so that’s 2 years at 5.29% instead of at 5.19%), we’re out by only £36, which I’m happy to “spend” on the peace of mind of a fix.
If I was a bit better at math, I could work out when rates would need to go up by how much for it to turn out to be the equivalent of a 0.1% increase for the full two years (and then can just think about whether I think it’ll go to that amount in that time scale)... any help? Or any other ideas/suggestions on how to guess which one to go for? Anyone out there psychic?
Cheers,
Steph
*it’ll be backdated to when I first made enquiries. We have the contract at home, so we’ve only just over a week to decide!
What I’m trying to figure out is whether this increase is likely to happen soon enough to make a two-year fixed rate mortgage a better bet than the current SVR we’re on... and I keep going back and forth in my mind on which is the better option!
We bought in Jan 08 at 100% LTV (I know, I know) on a discounted SVR tracker. We’re now just under 95% LTV, and the options are staying at our lender’s SVR (currently 5.19%) or going to a 2 year fix at 4.99% with a £499 fee (which we will pay out of pocket, and if we don’t switch, we’ll use that money as an overpayment).
Based on the MSE’s calculator thing, If rates don’t move for the full 27 months*, we will be £148 the poorer. If rates rise by only 0.1% over the entire period (so that’s 2 years at 5.29% instead of at 5.19%), we’re out by only £36, which I’m happy to “spend” on the peace of mind of a fix.
If I was a bit better at math, I could work out when rates would need to go up by how much for it to turn out to be the equivalent of a 0.1% increase for the full two years (and then can just think about whether I think it’ll go to that amount in that time scale)... any help? Or any other ideas/suggestions on how to guess which one to go for? Anyone out there psychic?
Cheers,
Steph
*it’ll be backdated to when I first made enquiries. We have the contract at home, so we’ve only just over a week to decide!
0
Comments
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You said you have a LTV of 95%, which lender is currently offering 4.99%?
Base rate is only going to go up, but by how much and when nobody knows, the is the risk/or gain of a tracker.
I think sometimes, if you prefer to feel comfortbale knowing you have fixed, then it can be peace of mind0 -
Dunfermiline Building Society is, to existing customers if enquiring over the phone (not sure why the rate advertised online is worse). Yeah, we have a week to decide if we want that peace of mind or not (at least I can be confident that rates won't go down?)0
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