3yr or 5yr fixed rate? what would you go for?

getmore4less

what's the follow on rates for the current deal and the new deals

presumably with these offers they are waiving any ERC on the current fix?

Whats the best tracker they will offer?

£89000 over ? lets say 20 at £500pm
1. £89500 2.95% £499 fee after 5years £71423
2. £89000 2.99% £000 fee after 5years £71017

6 weeks on 5.49% will be £550-£600 interest

rainbowcloudy

No they arent waiving the ERC on current deal. Should i ask them to then? Do they normally do that? ERC is about £2000. I would of thought ERC would still stand as im technically coming out of the contract.

getmore4less

if you are paying ERC to change you have to factor those into the calculations.

It is looking like the no ERC 5year 2.99% no fee deal is the best option wait a few weeks.

Add the change fees to the amounts being borrowed, make the monthly payment the same and run the numbers.


What are the follow on rates?

gjchester

goodmorningsunshine wrote: »

find out if you can make overpayments without any penalties, and what the fee would be if you happen to find a better deal and want to move.

Depends on the provider but having been looking around recently most fixed deals limit overpayments each year to a max 10% of the outstanding amount until the fix ends.
There may be other rules, for example for me Santander would only allow £499 overpayment each month fee free as well but you can top that up to the 10% in January only Fee Free.

I guess the OP needs to decide the timeline they have to pay it off the mortgage, a tracker rate that allows unlimited overpayments may be better if they plan to seriously overpay, but that depends on their long term view of the market as well as thier finances.

rainbowcloudy

Still cant decide. I would save around £20 a month with the 3 yr at the lower rate. That would be £720 over the 3 years plus balance would be about £450 lower. Although i plan to overpay about £650 month mayb a bit more. Then though after 3 years i would need to either do a rate switch which wouldnt cost me anything or a remortgage which would cost the usual legal/valuation fees unless the lender was offering free fees.
I dont want a tracker rate so not really thinking about that.
I guess it depends what fixed rate i could get after 3 years :-\
Still confused.

rainbowcloudy

Just been told the fee for the 5 year is £999 not £499

gjchester

rainbowcloudy wrote: »

I guess it depends what fixed rate i could get after 3 years :-\

If you work it out correctly there are many many people who will pay handsomely for this information....

rainbowcloudy

Wouldnt it be even better to go for a cheaper 2 year fixed? Because if rates do gradually rise then after 2 years i could get a cheaper remortgage rate than after 3 years? And am i correct in saying it doesnt cost to remortgage if the lender is offering free valuation and free legals?

Yorkie1

rainbowcloudy wrote: »

Wouldnt it be even better to go for a cheaper 2 year fixed? Because if rates do gradually rise then after 2 years i could get a cheaper remortgage rate than after 3 years? And am i correct in saying it doesnt cost to remortgage if the lender is offering free valuation and free legals?

Except that you need to factor in a) new product fees, if they apply; b) no guarantee that a lender will be offering free etc. in the future; c) the fee payable when you redeem the mortgage (not the ERC). The more frequently you change, the more often you may have to pay the fees associated - particularly if you change lender.

goodmorningsunshine

rainbowcloudy wrote: »

Still cant decide. I would save around £20 a month with the 3 yr at the lower rate. That would be £720 over the 3 years plus balance would be about £450 lower. Although i plan to overpay about £650 month mayb a bit more. Then though after 3 years i would need to either do a rate switch which wouldnt cost me anything or a remortgage which would cost the usual legal/valuation fees unless the lender was offering free fees.
I dont want a tracker rate so not really thinking about that.
I guess it depends what fixed rate i could get after 3 years :-\
Still confused.

If you are planning on this overpayment, why not add 500.00 of this onto what you are going to be paying, and take mortgage over a shorter period of time?,

and if you still have that 150.00 left over maybe a bit more then you can still make the overpayment providing your lender lets you without penalty (they usually let you pay 10% over the year).

Hope you follow this ok, do the figures on Martin's calculator you will be amazed, I know I was.

I have just made an overpayment, got new figures with new rates, and paying the same as I do just now have just managed to take between 3-4 Years off my mortgage:p