fix or not

webbit

i currently have a tracker 0.5% above base rate...but we need to raise cash for boiler kitchen bathroom was thinking 25k on top of balance takes it to 63 k and fixing for 10 years at 2.49%..wise move or not?

Thrugelmir

Will your existing lender offer a home improvement loan at such a rate?

webbit

yes first direct offering 10 year fix 2.49

webbit

i have 38k outstanding and want 25...adds a year to currnt mortgage but will take to 59 and this will be my last mortgage

dimbo61

How much is your home worth now ?
With the extra £25,000 what will your LTV be ?
Are you 100% sure you won't want or need to move in the next 10 years ?

webbit

worth 147k, ltv is 44% a 10 year fix would give us stability never go up or down, its a 2% gamble , interest rates are going only one way.
Defo wont be moving house unless we win lottery

kingstreet

Leave the tracker alone and borrow the extra on the best rate you can get.

At 2.49%, you'll pay more interest on the bulk (£39k v £25k) of your mortgage which is currently on 0.75% and assuming 0.25% increases spread over the next few years, it's going to take seven increases before your rate reaches the current fix.

Work out the difference in the monthly payments and make voluntary overpayments of the difference. Then your outstanding balance will fall quicker and you won't need a ten year mortgage at all.

kingstreet

webbit wrote: »

its a 2% gamble , interest rates are going only one way

This is as much (or more) about timing of rate increases as it is about their size.

AnotherJoe

There's no way I'd give up a 0.5% above base rate, not until I'd paid my mortgage off.
As said, get an additional on the current mortgage. Rates would need to rise hugely for you to be financially better off*, plus you are locked in for a very long period with an ERC that will potentially wipe out even those savings.

* even if they rose to 3 or 4%, unless it was within a very short time to now, you'd still be better off with the current deal because the majority of time would be at lower % and thus overall a lower %

getmore4less

what are the full terms of your current deal?
amount,rate, term, payment

whats the best rate you can get for additional borrowing?
whats the best rate for combined borrowing?

how much can you afford to pay a month?

webbit

ive got 8 years 9 months left on my tracker 0.49% above the base rate 38k left (£365 a month)
We want another 25k, i can get 2.49 on a 10 year fix on 11 year term (£217 a month)
..think i will keep current term as worst case interest rate goes to 5% it would add £85 to current deal which would still be in our reach but i very much doubt it will get anywhere near there, but in the mean time over pay current deal by £50.