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Reverting back to BMR
pollyanna24
Posts: 4,390 Forumite
Just wanted to get an idea of what other people would do in my situation.
Currently on a 5yr fix with the Nationwide of 5.63%. Runs out April 2013. It will revert to the BMR + 2% after that, so currently 2.5%.
This seems really cheap and one of the cheapest we will get out there at the moment, but I'm not sure whether I should be fixing again.
At the moment, we are allowed to overpay up to £500 a month which we have been doing for over a year.
After April, my mortgage will go down from £992 a month to £556 a month which is quite amazing really! We intend to keep paing the same as what we were, so £500 overpayment plus the amount we will now be saving with the new rate, i.e. £436, so a total of £936 on top of our mortgage payment a month.
We wouldn't be able to do this kind of overpaying with a fixed rate, so should we stick to the variable rate?
Currently on a 5yr fix with the Nationwide of 5.63%. Runs out April 2013. It will revert to the BMR + 2% after that, so currently 2.5%.
This seems really cheap and one of the cheapest we will get out there at the moment, but I'm not sure whether I should be fixing again.
At the moment, we are allowed to overpay up to £500 a month which we have been doing for over a year.
After April, my mortgage will go down from £992 a month to £556 a month which is quite amazing really! We intend to keep paing the same as what we were, so £500 overpayment plus the amount we will now be saving with the new rate, i.e. £436, so a total of £936 on top of our mortgage payment a month.
We wouldn't be able to do this kind of overpaying with a fixed rate, so should we stick to the variable rate?
Pink Sproglettes born 2008 and 2010
Mortgages (End 2017) - £180,235.03
(End 2021) - £131,215.25 DID IT!!!
(End 2022) - Target £116,213.81
Mortgages (End 2017) - £180,235.03
(End 2021) - £131,215.25 DID IT!!!
(End 2022) - Target £116,213.81
0
Comments
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pollyanna24 wrote: »We wouldn't be able to do this kind of overpaying with a fixed rate, so should we stick to the variable rate?
At the current stick to the SVR and make the most of repaying the debt.
Though monitor the financial news. As at some point in the future interest rates will edge upwards.
Remember, the less you owe the less the impact of any rate change.0 -
In my opinion, yes.
Do not give up base + 2% BMR unless you absolutely have to.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »In my opinion, yes.
Do not give up base + 2% BMR unless you absolutely have to.
Just out of interest, what do you mean by "absolutely have to"? Do you mean if rates start shooting up or something?Pink Sproglettes born 2008 and 2010
Mortgages (End 2017) - £180,235.03
(End 2021) - £131,215.25 DID IT!!!
(End 2022) - Target £116,213.810 -
That's one possibility, I guess.
I meant you should avoid giving up this rate if there is any other way of raising money you might need in the future, in the case of a house move, or home improvements etc.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Do you have any emergency funds?
Now you should get 2.5% in a couple of Cash ISA,s Cheshire BS being one so I would make sure you have up to £16,000 in savings and then overpay the mortgage.0 -
pollyanna24 wrote: »Just out of interest, what do you mean by "absolutely have to"? Do you mean if rates start shooting up or something?
My gut instinct is that once BOE base rises. Then the available spread of rates across the market will narrow. 2% may well look very good.
Banks and Building societies pay far higher FSA levy's than a few years back. So sub 2% above base rates are going to be the exception.0
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