Should we move mortgages or just stay and keep fingers crossed?

Mrs_Trouble

We fixed mortgage rates at the worse time possible a few years ago, fixing at 6.9% and then interest rates starting falling rapidly!

Our fixed rate with C&G is up at the end of June and we will be going onto their SVR which I think is frozen at 2% above the BOE rate - so we are currently looking at 2.5% when it changes over, if there is no increase in BOE.

We do have a lot of debt however my husband's aim is to have his CC debt cleared by December with the help of the money we are saving on the mortgage from June onwards and then ploughing that money onto the mortgage, which will be about £850 a month.

My husband has mentioned that we should start looking to fix the mortgage at a good rate from June onwards but I am not sure if we should. Due to the debt in my name my credit rating will be zero and this means we are restricted to staying with our current lender. He is convinced that interest rates will start to shoot up soon and we need to secure a good rate for security, whereas I am hoping that they won't so that we can use this time to overpay the mortgage and increase the equity (of which there is currently only 10%) in our home.

I obviously don't have the best approach to money but we have the potential to overpay the mortgage after Christmas to allow us a little more security than we currently have and to try and turn things around, but knowing my luck interest rates will probably start going sky high again - can anyone offer any advice?

Thrugelmir

Mrs_Trouble wrote: »

We fixed mortgage rates at the worse time possible a few years ago, fixing at 6.9% and then interest rates starting falling rapidly!

Our fixed rate with C&G is up at the end of June and we will be going onto their SVR which I think is frozen at 2% above the BOE rate - so we are currently looking at 2.5% when it changes over, if there is no increase in BOE.

We do have a lot of debt however my husband's aim is to have his CC debt cleared by December with the help of the money we are saving on the mortgage from June onwards and then ploughing that money onto the mortgage, which will be about £850 a month.

My husband has mentioned that we should start looking to fix the mortgage at a good rate from June onwards but I am not sure if we should. Due to the debt in my name my credit rating will be zero and this means we are restricted to staying with our current lender. He is convinced that interest rates will start to shoot up soon and we need to secure a good rate for security, whereas I am hoping that they won't so that we can use this time to overpay the mortgage and increase the equity (of which there is currently only 10%) in our home.

I obviously don't have the best approach to money but we have the potential to overpay the mortgage after Christmas to allow us a little more security than we currently have and to try and turn things around, but knowing my luck interest rates will probably start going sky high again - can anyone offer any advice?

Stick with the 2% above rate. You are highly unlikely to better this rate in the future.

As you say use the money saved to clear your debts. Then build both a savings reverse for emergencies and large item purchases , along with a little to over pay the mortgage.

Mrs_Trouble

Thanks for the reply and you are right about building up savings too.

Am I right in thinking that if we stay with our current lender (as I think we will have to) that we can switch onto a deal whenever we want and we won't be credit checked?

I just want to pay off as much as we can whilst the rate is low and then fix when interest rates start rising. My husband really thinks that rates will start rising rapidly and we'll be on the equivalent to what we're on now in 12 months - I think I have convinced him to hang fire for now though.

HAMISH_MCTAVISH

Mrs_Trouble wrote: »

My husband really thinks that rates will start rising rapidly and we'll be on the equivalent to what we're on now in 12 months - I think I have convinced him to hang fire for now though.

Your husband is wrong.

In order for you to pay 6.9% on the old Lloyds SVR rate base rates would have to rise to 4.9%.

It's incredibly unlikely the BOE base rate will rise that high again during the next decade, let alone by next year. Most forecasters now don't expect a rise at all until early 2015, and even when rates do start rising it'll almost certainly take many years to get back up to even 3% or so.

In fact I'd be prepared to bet the BOE base rate won't cross 4.9% until the very peak of the next business cycle, 15-20 years from now, and perhaps not even then.

You have a golden opportunity to stay on a great rate for the term of the mortgage, no more application fees, no more credit checks, etc. Stay on it and overpay. You'll likely not find anything better for many years.

Dave_Ham

Stick with the C&G SVR, given your equity you will not get close to this on the open market especially taking on board credit score.

You have to use this time to clear your unsecured debt first, forget the mortgage for now - get rid of this unsecured debt starting with the highest interest credit cards..

You also need this to clear up your credit file and make yourself marketable should interest rates creep up.

As said above, this is likely to take time and likely to come back as house prices increase and therefore its a double edged sword.

Do be mindful that C&G will not credit search again to swap products but will to further advance..

Good luck