Do my sums add up?

RavingMad

Hi


I've been waiting ages for my mortgage to drop into the 60% LTV so that I can tie myself in to a 5 year year fix but having checked online, the value of my house has actually dropped.


Currently I have £64000 mortgage over 16.5 yrs, paying £390pm on a 2.39% tracker


HSBC (who I'm with) have a 2 yr fix of 1.74% (fee free) which is £370pm


Throwing some numbers in a spreadsheet, would I be right in thinking that, in order for me to come out on top over 5 years, the follow on rate would have to be less than 2.8%?


Thanks

sivs

Hi, are you switching products with HSBC? they will use the purchase value not todays. They on reassess the value if you change term, borrow more or apply to another lender.

If you have access to online banking - login on going to mortgage options on the left hand side and this will give you all the options available and confirm what LTV your current mortgage.

Hope this helps

Thrugelmir

What's the follow on rate after the 2 years end?

What's the current tracker rate on offer? In essence could you get a rate similar to the one you are currently paying without incurring fees either.

getmore4less

£64k 2.39% paying £390pm at 2y £57,553 at 5y £47,286

£64k @ 1.74% paying £390pm in 2 years £56,747

£56,747 paying £390pm for 3 years 2.92% £47,281

Thrugelmir

getmore4less wrote: »

£64k 2.39% paying £390pm at 2y £57,553 at 5y £47,286

£64k @ 1.74% paying £390pm in 2 years £56,747

£56,747 paying £390pm for 3 years 2.92% £47,281

??????????????

getmore4less

The OP asked what rate to follow the 2y would be needed to break even with the 5 years on the tracker.

answer 2.92% OP thought I was 2.8%

This is basic stuff on the assumption rates wont change.

you have to make the payments the same or it just makes more unnecessary calculations to deal with the difference.

RavingMad

Thanks guys.


The follow on rate is 3.94% but there's no reason why I shouldn't get a better rate, all things being the same.


getmore4less - correct me if I'm wrong but if I were to pay £390pm @ 1.74% the follow on rate would need to be near 5% for the following 3 years to break even with the tracker.


Paying the extra £20 should see me approx. £800 better off after 2 years which is the plan

getmore4less

RavingMad wrote: »

getmore4less - correct me if I'm wrong but if I were to pay £390pm @ 1.74% the follow on rate would need to be near 5% for the following 3 years to break even with the tracker.

Have you done the sums?
If you have and get 5% your sums are wrong.

£64k @ 2.39% paying £390pm at 2y £57,553 at 5y £47,286

£64k @ 1.74% paying £390pm at 2y £56,747

£56,747 @ 5% paying £390pm for 3 years £50,796

followon at 5% £3500 worse off

RavingMad

Yep, I see where my figures were wrong; the spreadsheet automatically adjusted the monthly payment to £480 after the 2 yr fix!


So a 3 yr fix at less than 2.9% will see me better off


Thanks getmore