Standard Variable Rate - can it change at any time?

hufc2002

Hi all

I have been on my lenders standard variable rate of 1.99% + BBR now for 31 months and have been overpaying for 28 months.

Can a variable rate change at anytime or is this based on what the BBR rate is?

I was initially on a 5 year fixed rate at 6.39% therefore this is one of the reasons I have been overpaying. The other is that we want to move in around 4 years time therefore want to have a decent amount of equity in our current house as we took out a 100% mortgage.

Should I stick with the deal I am currently on or look for a fix?

Thanks

HappyMJ

hufc2002 wrote: »

Hi all

I have been on my lenders standard variable rate of 1.99% + BBR now for 31 months and have been overpaying for 28 months.

Can a variable rate change at anytime or is this based on what the BBR rate is?

I was initially on a 5 year fixed rate at 6.39% therefore this is one of the reasons I have been overpaying. The other is that we want to move in around 4 years time therefore want to have a decent amount of equity in our current house as we took out a 100% mortgage.

Should I stick with the deal I am currently on or look for a fix?

Thanks

2.5% is a good interest rate. I'd be wary of switching and not being able to get that rate back in the future.

Yes the mortgage rate can change at any time but it won't change by much and it still should be competitive. It's a gamble really you could fix again and if rates go up by much then you win the bet and if rates stay the same then you lose the bet.

Me....I'd stay.

Caladan

The correct answer is - Seek advice from a Mortgage advisor as they will look at your personal circumstances prior to making a recommendation.

I'll throw in a comment though - If you have good credit, good equity (at a guess, 30% or more) and good banking history, you may be able to re-mortgage from your standard variable rate (SVR) to a tracker (which DOES follow the base rate directly) at a lower rate than you are currently paying. Many of these come with no early repayment fees or exit fees.

As HappyMJ says, you have a good rate, but you may be able to do better.

Whether you should fix or remain on some form of variable rate (which a tracker is as well) is a different matter entirely. Again, something to discuss with a good advisor.

hufc2002

We bought at the height therefore only have about 10% equity max at the min.

alchemist.1

My personal opinion would be to stick with it for the moment with only 10% equity. We are looking at mortgages at 10% range and you are looking at more when you take into account fees.

hufc2002

As stated previously, we aim to move house in approx 4 years and plan to save circa £7k per year from Jan 2016 once my wife is back at work following mat leave.

We should then have circa £25k cash towards a deposit plus equity in the current house (at least £20k) therefore be looking a mortgages with a max LTV of 80%.

alchemist.1

I presume the question about SVR and whether to fix is based on here and now. At this point you have 10% equity. Thats what the fixed deal will be based upon? no?

It doesn't matter how much equity/savings you will have in four years time and your plans apart from Early Repayment Charges at that point (for example a fixed deal less than 4 years).

Caladan

To add - With a 90% loan to value now, as alchemist says, it doesn't matter what will (read: may) happen in the future, at least not to a lender.

You have a VERY cheap rate for a 90% loan, you wont get better I think. As to whether or not to fix at a current 90% rate...again, this is for a qualified advisor to say, but if you aren't going to reduce the LTV anytime soon I'd seriously consider it whilst rates are low and likely to come up next year (as rumoured, but that's been the case for some time so who knows). Largely it depends on if you are willing to gamble on rates not rising very quickly.

getmore4less

The terms of the rate will say how it can change,
some are tied to the Base rate some not.

With a rate of base + 2% another option is to just save the money, does the same thing as build equity for the move.

You may then be able to port the cuurent rate and top up, this may be better than overpaying and then getting a bigger new loan(or topup).