Interest Rate Concerns

Gooner71_2

The papers this morning were indicating that the Bank of England is considering a 0.5% increase in the base rate.

I'm tied into a 2yr discount mortgage until August 2008 but would switch to a fixed if it were at all possible. There weren't any viable fixed rate mortgages due to poor market conditions last August when I remortgaged.

My redemption penalty is approximately £9K making a switch to fixed rate unfeasible now unless there is a clever way out of the penalty.

With a £250K mortgage to my name, each .25% increase in interest rate costs me £50 extra each month. If the BofE increases the rate to 5.75%, it will mean my mortage is costing £250 extra per month since last September.

I'm worried what this might increase to over the next 15 months.

Any clever ideas of ways to switch without incurring the penalty?

MortgageMamma

No I'm afraid no clever ways out - however, you are on a discount mortgage not a tracker which means there's a small chance that if rates do increase then your lender will not alter the SVR

Gooner71_2

Its pretty much the same as a tracker in that its always .29% below the base rate.