Standard Variable Rate Query

IGGt

We are coming to the end of our 5yr fixed period mortgage which was 5.5% (£585 pcm). When I went to renew I was told it would revert to the Standard Variable Rate of 2.5% (£430 pcm), or I could remortgage on another 5yr deal at 6.6% (£660 pcm).

On the face of it, it seems a no-brainer, just let it move to the SVR, and save / overpay £150 pcm, and then as the SVR rises, look at remortgaging later on, hopefully at a better rate.

What I was wondering, is there any negative impact on us letting the mortgage move to the SVR?

(n.b. moving elsewhere is so far looking unlikely as the value of the property has (apparently) fallen, and so we would need to remortgage at approx 95% LTV).

dimbo61

If you have no other debts I would overpay the mortgage as much as possible!
You have for the last 5 years been paying a mortgage at 5.55% ( £585 pcm) and if possible I would keep your payment static and maybe even pay more to pay down your mortgage debt while building up your equity.
This builds up an overpayment pot ( which means a " mortgage holiday if needed")
You save thousands of pounds in interest
You clear the mortgage early and can retire early

Thrugelmir

You'll find it hard to better 2% above base as a lending rate in the lifetime of your mortgage.

So suggest you use the low interest rate you've been lucky enough to end up on to your advantage. Make sizable monthly overpayments. As and when interest rates rise you'll then be shielded from the worst.

If you look at the follow on SVR of current fixed products you'll see that they are considerably higher. So there's no long term gain.