Advice please - to fix

upsydaisy09

Hello

I'm hoping someone can give me advice / opinions. We have a mortgage of £95000 on 29 yrs remaining, Santander. House prob worth £120,000 (bought for £110,000 including the 5% deposit). When our 5 yr fixed ended we stayed on the svr which is 0.75% above the BOE base rate. This works out at roughly £335 a month. We pay £500 each month so are overpaying what we can afford. In an ideal world we would over pay much more but we cannot afford it right now (childcare etc). We were told by Satander that we needed to pay roughly another £10,000 off before we had decent fixed rate opportunities opened up to us (Loan to value I believe).

I've been reading about interest rates increasing and that people are remortgaging / fixing before they rise. I am worried about what would happen if they did rise etc. We do not have any savings but we don't live beyond our means and right now we are thankfully managing our finances well, although unable to save as all goes on bills / food / childcare and I will be going on maternity leave soon and redundancies are always a worry....

If you were me what would you do? Start looking at fixing for 2 yrs plus? To stay as we are or fix? Would getting a home valuation help us to get a better mortgage offer? (I think it would be valued at over £130,000 so the LTV would be better than what Santander say?) Any advice would be greatly appreciated because I freak out when I read headlines and just want to do what is best for me and my familiy's home security, but do not have the mortgage knowledge to know what is best, apart from what I read in newspapers etc. Thanks.

Thrugelmir

I would save into ISA's rather than overpay the mortgage. As you'll currently earn a higher rate of interest on the savings currently.

At the opportune moment pay down the mortgage. May not happen for a while but one day BOE base will be much much higher.

sejdee

I'm no financial expert, but after lots of research and looking around I can't see interest rates changing to any large extent for a good while yet, but they will only go up when they do.
For me, I'm still going to go for a fixed rate, as I know exactly what I'll be paying for the fixed term. Towards the end of that term, then I'll re-assess the market and choices then.

An ISA may well give better return for your money at the moment, so might be worth looking at that option to put your over payments into.

Check with your mortgage provider on the over payments to see if an ISA is better value for money.

Thrugelmir

sejdee wrote: »

I'm no financial expert, but after lots of research and looking around I can't see interest rates changing to any large extent for a good while yet, but they will only go up when they do.

Market rates are edging upwards. SVR's have moved significantly in 2012.

Don't be fooled that because bank base hasn't moved that wholesale markets aren't.

billybear1

So would you suggest a fix over a tracker atm then? Even if not holding out for just one more year?

HAMISH_MCTAVISH

If you're with a lender who can not unilaterally change their SVR or Tracker rates, and you have a good deal, then stay on it.

Base rates will not rise significantly for years.

If you think your lender may try to change your deal unfairly, see this thread.

https://forums.moneysavingexpert.com/discussion/3920181

hcb42

when you do remortgage, I would look at significantly reducing the term.

Perelandra

upsydaisy09 wrote: »

When our 5 yr fixed ended we stayed on the svr which is 0.75% above the BOE base rate. .

Are you still paying 0.75% over the BOE base rate?

If so, the BOOEBR will need to move an awful lot for it to catch up with the fixed-deal rates, so if I were in your position I would be holding on to that for as long as I could.

upsydaisy09

Thanks for your advice- much appreciated. Think I will stay as we are (0.75% above BOE rate) but if I can find a good 5 yr fixed then I will go with that for the peace of mind.

Dave_Ham

You are crazy - even if you are slightly slow to react if and when rates go up, you will still be better off with the overpayments you are making now...

Best 5 year deal you will get is around 3.5% and therefore its a no brainer to hang out where you are and take advantage - there is no peace of mind in there, just financial sense..

I wish you well...

Morgage_Confused

why would you want to do that?

hcb42 wrote: »

when you do remortgage, I would look at significantly reducing the term.