What would you do - stay on SVR or not?

Jane742

Hi there,

I'm looking for some opinions please...

We have a mortgage which is currently split into two submortgages. Part 1) we carried this over from our previous property. It is a variable rate mortgage which we moved to when an old fixed rate mortgage came to and end. It is 2% above base rate for the remainder of the mortgage (currently 25 years) so pretty good and obviously not something that is offered any more.
Part 2) a fixed rate covering the extra amount we needed when we moved which comes to an end in August.

We need to remortgage part 2 in August and are looking at a rate of 2.19% fixed for 2 years.

My question is, should we also move part 1 onto this fixed rate? It will obviously reduce our payments in the short term but once we leave the variable rate, we wouldn't ever get it back again.

Looking for views on what might be best long term.

Thanks in advance and happy to clarify anything I've not made clear.

Thrugelmir

With 25 years of the mortgage term left to run. I'd stick to the current SVR rate. As you quite rightly say. Once you leave the rate you may never get it back. By remaining on the rate you continue to leave your options option.

lr1277

I would personally stay on SVR, as with my building society, being on SVR means I can make unlimited overpayments of any amount. There are no restrictions on overpayments.

Jane742

Thanks very much.

I know it's not possible to predict the future but how much higher than base rate do fixed price rates tend to be? We'll be in 60 - 75% ltv bracket for the foreseeable future.

Thrugelmir

There's no direct correlation is the quick answer.

getmore4less

Without the relative size of the loans and other information no one can tell you what could be best option.

there are a lot of factors like fees and any benefits that come with the product.

eg nationwide BMR has some features that for some they are worth keeping even if financialy it could cost more.

Jane742

Thanks.

Part 1 is around 118k and part 2 around 67k.

It's a tsb mortgage, no particular benefits that I'm aware of. Have looked at other lenders but, after taking other lenders' fees into account, tsb rates are pretty competitive. Really just don't know whether to give up the variable rate that we won't get back.

Thrugelmir

When looking at other lenders rates remember to factor in all the other costs of switching providers. Potentially mortgage exit fees, product fees, legal fees, valuation fees.

I always say if in doubt overpay the current mortgage. At it's a no lose decision. Whatever you decide to do longer term.

PaulW922

I have just re-mortgaged to a fixed discount for five years. Nobody knows what interest rates will do. We can only speculate. I took the view that the fix I was able to get much much lower than the SVR and it was for five years so I should go for it. Whereas I reckon base rates will stay low I cant see mortgage rates getting any lower. Additionally, we are perhaps entering a period of uncertainty with the EU referendum coming up. Markets hate uncertainty and the currency could be affected in the short term. (I am not making a pro or anti EU comment here btw!) So if I were in your position and could get a good fixed rate I would consider it. However 2% over base is very good.

I would avoid changing lenders less I could get a much better deal because, as Thrugelmir says, you will enter the valuation, credit profile, affordability cycle. Hassle...

Finally, most fixes do still allow a limited amount of overpayments