First Active Mortgage

davidfe1622

Hi

I had a 5 yr fixed rate of 5.19% with 1st Active.This ends in August and i then will go onto their Long Term Rate of 1.60% (1.10% above the current Bank of England base of 0.5%)

So their long term rate tracks at 1.10% above base.Can anyone see any good reason why i should go and search out another fixed rate mortgage right now,i would like to enjoy the cash for a while.
Base would need to go to 4% before i start to loose.

David.

dimbo61

NO cant think of one reason and you now have total flexability to overpay as much as you want but please either overpay or save at least the same amount as you are now going to save by having a smaller mortgage payment each month

opinions4u

davidfe1622 wrote: »

Hi

I had a 5 yr fixed rate of 5.19% with 1st Active.This ends in August and i then will go onto their Long Term Rate of 1.60% (1.10% above the current Bank of England base of 0.5%)

So their long term rate tracks at 1.10% above base.Can anyone see any good reason why i should go and search out another fixed rate mortgage right now,i would like to enjoy the cash for a while.
Base would need to go to 4% before i start to loose.

David.

I'd stick with that!

But don't use the cash for frivolities. Use it to pay off higher rate debt or for specific projects in life (home improvement, special holiday etc) or to build up a contingency fund of a few months net pay - to give you a cushion should life be harsh in future.

davidfe1622

Thanks for the advice folks,discussing with my wife it looks like we will continue to pay what we do currently to our mortgage and accelerate the capital payment on it.(if they will let us)

Cheers

David.

dimbo61

Just write and ask them to have a static mortgage payment at the same amount as you are already paying !
Now other people may disagree with this and tell you that you will earn more in cash ISA,s or other types of savings BUT each time you overpay the mortgage you are also building a mortgage reserve so if you need a mortgage " holiday" you can have one.
The mortgage gets paid off quicker saving you thousands in interest and if rates do start to rise your mortgage payment wont because you are already overpaying !!!!

andyj2

My wife and I were in exactly the same situation you are in, about 18months. We have been saving £270/month, every month for the last 18, in a 5% Northern Rock Regular Monthly Saver account. We have been keeping it in an easy access account, as we wanted it 'at hand' should we need it, but with the medium-term goal of either making a lump-sum payment off the capital (when the SVR exceeds the savings % rate), or using it as additional cash for when we move house......

We're currently paying about £450/month at present, which at a rough calculation, means we're repaying about £300/month off capital. So every 3 months, we're increasing our equity in the house by ~£1k.