SVR or Fixed?

davidc1986

Hi,

I'm coming to the end of my 3 year fixed rate deal (~5.3% cant remember exact interest rate off top of my head). My plan was to drop onto the SVR which is currently 3.5% and continue paying the same amount as i do now, therefore overpaying. My mortgage broker has suggested a 2 year fixed rate deal at 3.99%, and has told me that he expects the SVR to start going up soon. I'm not keen on another fixed rate deal as i am looking to sell up in 12 - 18 months and the fact that it is portable doesn't help either as i won't be buying another house straight away. I've read a few articles that seem to say that being on the SVR in 2012 is a risky position to be in. I guess what I'm asking is dropping onto the SVR a big risk? Are SVR rates likely to rise significantly (above my current rate) in the next 2 years? Any advice would be greatly appreciated.

Thanks
David

MRG

Unfortunately David no one knows for sure what the rates are going to do.

Have a look at your monthly payment on 3.5% and work out what it changes by as if the rate was to go up by 0.5%,1%,1.5% etc

Also have a look at the redemption penalty amount if you were to take the two year deal at the point you think you may want to sell up. (that may kill any savings you have accrued on the fixed amount)