Is anyone struggling because of mortgage interest rate rises?

HairyHandofDartmoor

We are about to come off a 5 year fixed rate repayment mortgage and I am slightly worried that our payments will go up. Our fixed rate was 5.74% (rubbish I know, we really timed that badly as for most of the 5 years they were much lower than that!) :eek:

As interest rates seem likely to go up to 6% soon I'm wondering whether to go for another fixed rate. We would like to move house in a couple of years so would go for a 2 year fixed rate if we did go for one. Or should we go for a tracker and hope interest rates don't go up any more?

Has anyone had big increases in their mortgage payment because of the recent rises, and if so how are you coping with it? Could you cope if it went up any more?

bargainbetty

Hello Hairy,

I've got a fixed rate at 5.65% (I know how you feel about the last couple of years of low rates!) I have another two years to run on it, and have already decided that I'll get another fixed when it ends.

I think of it as swings and roundabouts - yes we probably paid a few pounds over the last year or two, but I know that I am protected for the next two years from any further rises! Living alone, knowing exactly what I will be paying on it for the next 24 months is worth diamonds to me!

Have a look at your options, and work out what repayments you would have to face if there were further rises. If you can't afford too many 1/4% rises, then I'd take security over a short term drop in payments.

May be I'm just over-cautious!!

Good luck either way x

HairyHandofDartmoor

Thanks bargainbetty. This is why we took the fixed rate in the first place as we were increasing our mortgage to move to a bigger house and wanted to have the security of knowing exactly what our payments would be. We know now it would have been cheaper not to, but it is easy to be wise after the event!

Our lender wants to have us in for a review, but I don't want to be just 'sold' things without doing a bit of research and thinking first.

benbenandme

If you pop over to the mortgage free wannabee board, they have some calculators on a sticky whichwill let you test out some different rates so you can see how further rises would affect you. I too would always go for the security of a fixed rate just so theres no nasty surprises round the corner. x

spud30

Our fixed rate ended about a month after our DMP started

I assume out mortgage lender wouldnt consider offering us another fixed rate offer as we owe them money on the DMP.

Our monthly payment has increased by £100 over the last year :eek:

HairyHandofDartmoor

Blimey Spud! That's a lot! What rate were you on when it was fixed? and roughly how much is your monthly payment (if you don't mind me asking?)

spud30

HairyHandofDartmoor wrote: »

Blimey Spud! That's a lot! What rate were you on when it was fixed? and roughly how much is your monthly payment (if you don't mind me asking?)

It was fixed at 3.89%. Our monthly payment is now £414 :eek:

HairyHandofDartmoor

So do they have to adjust all you other payments every time the mortgage rates go up, because it has a knock on effect on the rest of your budget doesn't it? Surely your dmp would work better if you were on a fixed rate as it would give stability to your whole budget!

spud30

HairyHandofDartmoor wrote: »

So do they have to adjust all you other payments every time the mortgage rates go up, because it has a knock on effect on the rest of your budget doesn't it? Surely your dmp would work better if you were on a fixed rate as it would give stability to your whole budget!

I'm not sure hun. We're due for a budget review next week, so I'll be asking CCCS that very question.

We've managed so far because I get some overtime at work, and as it's not guaranteed so not part of the budget.

bargainbetty

Why not set up a few appointments at other lenders and see what they have to offer? Don't be forced into staying with this lender, as they tend to not be as friendly to existing customers as they are to new customers!! I'd been with Halifax for 5 years when they offered me a 0.5% discount on the standard variable rate and nothing on the fixed rate offer..... no wonder I'm now with Alliance and Leicester!

Shop around - do some online research too and make some phone calls. Nothing throws a banker off his spiel faster than someone who knows what they are talking about!!

Have a good one!

james32_uk

I can see interest rates getting into double figures in the next 2-3 years so I would go fixed everytime.