Santander Mortgage Rate Change - Shall I Do it?

Knighttrader

Hello - Hope Everyone is Well & Great Forum.

I have a Santander mortgage which I took out in 2004, I have £134,000K outstanding and am currently on the SVR which is 4.74%.
I called Santander up today for a better rate and they offered me 4.74% fixed for 3 years with no fee.

I'm not sure what to do?! should I wait for a better rate, I doubt that Santander can give me a better fixed rate which is less than the SVR? I have a feeling that rates will start to rise within 1 to 2 years which means it makes sense to fix it.

What shall I do?

kingstreet

There are far better rates on offer in the market, many of them fee-free. Have a look at your remortgage options instead.

Thrugelmir

Do you have an interest only mortgage?

amnblog

is there no equity in the property?

Knighttrader

When I valued the property 6 months ago the value was £235k, the outstanding mortgage as mentioned before was £136k. Unfortunately I dont have the best credit score because I fell behind with some credit card. I am also self employed for the last 11 months so remortgaging is out of the question.

Any advice?

Knighttrader

When I valued the property 6 months ago the value was £235k, the outstanding mortgage as mentioned before was £136k. Unfortunately I dont have the best credit score because I fell behind with some credit card. I am also self employed for the last 11 months so remortgaging is out of the question.

Any advice?

kingstreet

Knighttrader wrote: »

What shall I do?

Please don't save extremely important information for the "follow-up" post, when it potentially changes anything that might be suggested?

Knighttrader

Thanks for being so constructive.
I'm thinking of fixing for three years at 4.74%, is there any reason why I shouldn't?

Thanks in advance. Sorry for omitting all the information, would appreciate any genuine constructive advice, I will check the etiquette required in the forum now.

kingstreet

You have two options;-

- take the fixed rate on offer if you want payment certainty now, as there's no other way to achieve that

or

- remain on standard rate for the time being. Interest rates are not expected to change much, if at all, in the next couple of years. You could then look to remortgage when you have a year or two evidence of income behind you and your credit file is a little cleaner.

The loan to value is only going to get better too. You'll hopefully get to an LTV of 50% in that time and with a combination of good LTV, good evidence of income and decent credit record for at least three years, you'll get a much better rate.

Knighttrader

Thanks for the excellent advice. I think I'm going to take the fixed rate and have payment certainty over the next 3 years. During this time I'll have financial information for three years with regards to my self employed status, I could also use this time to significantly improve my credit status and make more payments to improve the LTV. Hopefully after the three years I could get a better rate.

Does this make sense?

kingstreet

The only potential issue I can see is what happens if rates rise in year three, upto a year after the latest point of a general election? (May 2015 latest).

You take a three year fix, end up paying 4.74% for perhaps a year longer than you need to, then when it ends in October 2016, you are coming out just as rates are rising and you've missed the boat on a decent five year fix you could have got in 2015?

This is pure speculation and no-one knows what might happen to rates and when, so you have to follow your own personal preference for payment certainty, if you feel it that important to you.