tracker question...

mintymoneysaver

Our fixed rate is coming to an end, and as we only have a lowish mortgage ( 50,000) I have been told that it is uneconomical to get a new fixed rate as even if the interest rate increases, as it obviously just has! it would take longer to pay back the fees from the fixed rate than the interest on the tracker if you see what I mean! ( We are planning to reduce the term from 23 to 20 years at the same time.
Would be interested in your comments.

Rick62

You can get fees free fixed rate mortgages. Cheltenham & Gloucester, for example, have 2 yr fixed at 5.25% or 5 yr fixed at 5.35% both with no product fee and free valuation and legals.

At SVR you will be on about 7%, which would be about £1000/year more, so well worth remortgaging. Who told you not to?

mintymoneysaver

A mortgage advisor, whole of market supposedly...would it be in their interests not to recommend a fixed rate to me? They suggested a woolwich lifetime tracker, which is +0.39% above base rate with no set up, or valuation fees and £200 towards solicitor costs.I do want the facility to make overpayments at any time, so maybe this would make a difference?

UK007BullDog

A lot of fixed deals you can overpay.

You need to check out how much you can afford a month.

On £50k your monthly mortgage would be around roughly £380 repayment

With Nationwide you can overpay up to £500 each month. So £880 in total.

Alternatively if you know you can pay £500 then let that drive your mortgage payments and that will then reduce the term from 23 to maybe 19 Yrs?

In this present climate I would fix it for the next 2 - 5 yrs especially if you have absolutely no plans to sell up, move etc. That will save you more than being on a tracker. As the rates will continue to go up. I thought at the end of the year 2007 we would be at 5.50%. But we are now at 5.25% already and we expect another rise in spring. If the housing market does not cool and the spending and war chest costs the tax payer we can see another rise this summer and maybe one more just before Christmas for good measure to stop people spending. So looking at 6.00% to 6.25% heading into 2008. What is happening in the US does not give a lot of reassurance either as 3 sub prime lenders went bust in the last 6 months. They are even thinking of getting rid of interest only mortgages in the US. Some of the US lenders struggling are also owning some lenders here in the UK.