Fixed Rate ends Sept- what deal now?

JimmyTheWig

davidscot wrote: »

Any advice or tips would be appreciated here.

A couple of points I'd like to make.

I think it is pretty clear that rates will be high in two years time than they are now. For this reason I would say steer well clear of a two year fix. I'd say either go for the security of a long term (e.g. 5 year) fix or go for the value of a cheap variable rate (either staying put or remortgaging).
The rate a bank will give you for a 5 year fix will be based on what they think the rates are going to be doing over the next 5 years. The chances are they know more about what rates will do than you do, so you are unlikely to second-guess them by getting a "good value" long term fix. So you will probably be paying more over the 5 years with a fix than you would with a variable rate. But what you are paying for is the security. You need to judge for yourself how much you value that.

The good news for you is that your mortgage isn't (imo) huge and you can afford to pay more to get the term down. What you could do is go with the variable rate and put the difference into a savings account as a buffer. Then when rates go up the amount you put into the buffer account will drop. Then if rates go above what you can afford you've got money set aside to help you out with the repayments. Obviously there's a chance that the money will run out before the rates drop again - and that would be a reason to go with the fixed rate.

The other thing to note is with a small-ish mortgage that you have outstanding that the fees for arranging a mortgage will be very relevant to you. If you pay, for example, £1000 for a 2-year discounted deal with the intention of switching after the two years that effectively adds 0.7% to the interest rate over those two years. E.g. 2.0% for two years with a fee of £1000 would be more expensive for you than 2.5% for two years with no fee. For someone with a larger mortgage that wouldn't be the case.

AMILLIONDOLLARS

Read on this site that NW will be dropping their fixed rates by 0.3% tomorrow.

AMD

ghaffa11

You could consider a 10 year fixed rate with Yorkshire building society at 4.99%. This is mortgage lets you overpay by up to 10% of the o/s balance each year, so you could effectively pay what you pay now and be mortgage free sooner.

Plus you get the certainty that a fixed rate provides.

Gorgeous_George

If you want a fix, it will probably be at a rate higher than 2.5%. When the fix ends, it is likely that your follow-on rate will be higher than 2.5%.

I'd stay with the 2.5% BMR at Nationwide.

GG

davidscot

ghaffa11 wrote: »

You could consider a 10 year fixed rate with Yorkshire building society at 4.99%. This is mortgage lets you overpay by up to 10% of the o/s balance each year, so you could effectively pay what you pay now and be mortgage free sooner.

Plus you get the certainty that a fixed rate provides.

So you can get a fixed rate for this length of time? I didn't realise that lenders gave such a long fixed rate.

ghaffa11

davidscot wrote: »

So you can get a fixed rate for this length of time? I didn't realise that lenders gave such a long fixed rate.

Yeh there are not many 10 year fixes out there, only YBS, Britannia, Co-op and Leeds BS.

This is by far the best rate out there but you need 25% deposit and the fee is 995 quid

AMILLIONDOLLARS

Gorgeous_George wrote: »

If you want a fix, it will probably be at a rate higher than 2.5%. When the fix ends, it is likely that your follow-on rate will be higher than 2.5%.

I'd stay with the 2.5% BMR at Nationwide.

GG

I really must dig out my contract for my Nationwide fixed rate which ends in September, I know I will be on the 2.5% BMR rate, which is 2% above Bank Mortgage Rate, but not sure how long this 'tracking' rate will last, for example will it be for the life of the mortgage, for the next twelve months, two years etc....

AMD

jimjames

AMILLIONDOLLARS wrote: »

I really must dig out my contract for my Nationwide fixed rate which ends in September, I know I will be on the 2.5% BMR rate, which is 2% above Bank Mortgage Rate, but not sure how long this 'tracking' rate will last, for example will it be for the life of the mortgage, for the next twelve months, two years etc....

AMD

It is the life of the mortgage and at no fee. Unless you expect rates to increase rapidly over the next 2 years I really cannot see a reason to take out a 2 year fix at the present time if the alternative is base rate + 2%

AMILLIONDOLLARS

Thanks Jimjames.

I am going to stick and use the savings towards paying off the mortgage. I dont have a crystal ball so will keep my fingers crossed that rates remain low for the next two years!!

AMD

davidscot

jimjames wrote: »

It is the life of the mortgage and at no fee. Unless you expect rates to increase rapidly over the next 2 years I really cannot see a reason to take out a 2 year fix at the present time if the alternative is base rate + 2%

This is the way I was thinking after reading the posts so far.Think it may be best to sit tight on base rate +2%. Now if I used the excess money left to overpay then it would reduce the term of mortgage.