Should I break my 5 year fixed rate?

_Andy_

MonkeyMama wrote: »

Kingstreet - Mortgage Broker found me a tracker at 1.98%...need to research where she found it and income is fine for new mortgage at same amount. Pension plan I need to research a bit more.

What's your plan when the base rate rises?

_Andy_

The pension payments would be huge to generate a lump sum payment that big. I take it your broker didn't discuss repayment vehicle issues, small things like that?

DannyboyMidlands

MonkeyMama wrote: »

Re selling - its a difficult year to do that as our eldest is starting school in sept and if we move now, its going to disrupt whole process and she will have to rely on getting a one off place somewhere else.. Also we bought our house when prices were lower, we couldn't afford to buy our house now - stupid london prices. Hence why I am trying to find a strategy that doesn't involve selling.

For 20 grand a year you could pay for her to go somewhere nice.

MonkeyMama_2

Kingstreet - I rang a mortgage broker who suggested a rate of 1.98% - need to double check who it was with. Incomes are fine to keep same mortgage level. Need to investigate more about pensions - will need to speak to my work - but planning to do that next week. I figured with 32 months left to go if I could get that rate, it may *just* pay off.

MonkeyMama_2

sorry for double post on last post.

We had planned to shield ourselves from rate rises with the 5 yr fixed which goes until May 2014 so yes that would be a risk if we moved onto a tracker. If base rate rises to ridiculous levels then yes we are in trouble, but I don't think we would be alone! Plus by 2014 we are unlikely to still be in this house -long term plan is to move somewhere else less expensive than London. My concern is over whether it makes financial sense to remortgage to a lower tracker or fixed rate over the rest of the life of the current fixed rate which is another 2.5 years or so. Does paying £19,000 now in charges make it worthwhile? The answer I seem to be getting is no and I have had some great advice - so thank you all. Just hoping Kingstreet may come back again to add thoughts on the 1.98% mortgage.

kingstreet

If you can let us know who it's with, we may be able to give you an indication of likely success with an application.

MonkeyMama_2

Its actually a fixed with Leeds BS on 1.99%

dimbo61

Its a 2 year fix at 1.99% then 5.69% SVR !!! plus £1999 fee on top then remortgage costs.
Best to stay where you are and look at spending
Use this site to save money on everything you buy or pay for

kingstreet

MonkeyMama wrote: »

Its actually a fixed with Leeds BS on 1.99%

With a £2k arrangement fee. Sounds ok as deals go for higher mortgages. They will do upto 70% loan to value on interest-only where sale of property is the intended method of repaying the mortgage.

I still think this is a potentially flawed strategy. This two year fix could be ending just as rates are on the up. You will save money during that period, but in the third year where you could still be paying 4.15%? Who knows?

£19k penalty + £2k fee v saving around £720 a month for just two years?

You'll save £17,304, at a cost of £21k. The other problem, is when you come to sell the house or move the mortgage in a couple of years you won't owe £420k any more, you'll owe £441k. Adding unsecured debt into the mix will mean you cut your monthly payments now, but at the expense of paying a lot more interest later and an even bigger debt to remortgage or pay off.

MonkeyMama_2

Kingstreet - you make some very good points, and its exactly that kind of financial analysis I was looking for help with so thank you for that. It seems that staying put is the right way to go!