SVR, to keep or not to keep

Berger_3

Hi all,


I used to be a mortgage advisor pre recession but have been out of the game for a while so I am worried I am missing something here:


I will be looking to move soon, I have a current mortgage of about £130k on my lenders SVR of 2.5% (this is a pre recession, fully portable if I wish)


I will be borrowing around double my current mortgage, my plan was to go onto a five year fixed as I would be happy to fix below 4% for this time frame as base rate is likely to be about 2.5% in two to three years time.


Obviously if I wanted to keep my SVR then I would have to stay with my current lender and fix the extra borrowing, but my question is what is the benefit of doing so?


I have been on the SVR for about four years now, if I was doing this back then or even a couple of years ago the benefits of keeping the SVR would have been obvious, but with rates now likely to start rising relatively soon (in the next year) I'm less sure on what other benefits there would be? Not least because this ties me to my current lender if I wish to keep it.


Thank you in advance for your input

Thrugelmir

Berger_3 wrote: »

(this is a pre recession, fully portable if I wish)

Still subject to. Lending criteria has changed post recession.

2% above base is a good SVR rate. With few exceptions, you'll be unlikely to better this in the years ahead.

Look at the follow on rates on new products after the fixed term period has ended.

Typhoon2000

If you think base rates will rise to 2.5% in 3 yrs time, you will be better off staying as you compared to 4% fixed for 5 yrs and then what I imagine will be higher follow on rate.

Pete9501

Just been through this as we are currently sat on the Nationwide 2% plus base (total 2.5%). Decided to change and fix for 5 because rates might go up over the next few years and if they don't we are only an extra 0.39 worse off. In 5 years we wil be in the safe zone so it doesn't matter what the rate is, we will be able to afford it. A single 0.5% rise at any time and we are better off.

We loose payment holidays and can only over pay 10% rather than unlimited at present so loose some fringe benefits.

Pease of mind was worth fixing for.

dimbo61

So what you will be asking your current lender is can I port my existing £130K loan and rate at 2% above the BOE base rate and borrow another £130K at under 4% fixed for 5 years?
Does your current lender have such deals for existing customers?
£260K of debt so I hope under the new MMR rules they will lend you this amount.
Check if you can overpay and if allowed then hit the part with the highest interest rate.