Would anyone still consider a variable rate??

Glover1862

Doesn't seem much love for them at the moment, I've got two options
Both offsets

2.09% 5 year fix £999 product fee ERC applies

1.84% variable for the term £999 product fee No ERC

Normally I would go for the 5 year fix as it is only 0.25% away from the variable so effectively one rise away which is predicted in May, however using the offset saving I will only be paying interest on £70k so even if interest rates went up the impact wouldn't be so great. I'm also adding about £1000 pm to the offset saving and hoping to be fully offset within 5 to 7 years, once fully offset I could keep the mortgage running for the full term at no interest charge.

I could do exactly the same with the fixed product but would need to find a new product at the end of the fix, this is the only real disadvantage of the fixed, its a very close call, any advice?

getmore4less

you have said before you have around £110k mortgage with £50k to offset which is not quite the £70k.

if these are the Coventry ones

if we use £110k and £50k 1.84% offset there is a non offset flex at 1.64% you only need a savings rate of 1.4% to break even,

As you offset more that creeps up to 1.64% if you use the cash the savings rate needed goes down

With the tracker as mortgage rate go up savings will likely follow.

When it comes to running an offset long term aiming for 100% offset to act as line of credit you want a good low tracker rate locked in only changing when A fee free lower rate tracker is available.

The risk of fees at end of fixes or ending up on the SVR rates defeats the objective.

Thrugelmir

Glover1862 wrote: »

Doesn't seem much love for them at the moment,

Lenders are making sure that they don't get caught out as they did when rates fell. Variable rates are being priced at a comfortable lending margin. Should money for fixed rate products become scarce.

BOE has lent over £51 billion under the mortgage funding for lending scheme. The scheme closed at the end of January. In due course this money needs to be repaid.

Glover1862

getmore4less wrote: »

you have said before you have around £110k mortgage with £50k to offset which is not quite the £70k.

if these are the Coventry ones

if we use £110k and £50k 1.84% offset there is a non offset flex at 1.64% you only need a savings rate of 1.4% to break even,

As you offset more that creeps up to 1.64% if you use the cash the savings rate needed goes down

With the tracker as mortgage rate go up savings will likely follow.

When it comes to running an offset long term aiming for 100% offset to act as line of credit you want a good low tracker rate locked in only changing when A fee free lower rate tracker is available.

The risk of fees at end of fixes or ending up on the SVR rates defeats the objective.

Thanks for that, I'll look into it further. The figures have gone up as I'm remortgaging and I've borrowed more money.