Remortgage: Wait for base rate drop?

Tishypoos

Hello,
I am hunting round for a remortgage deal before my fixed rate with Alliance and Leicester ends on 1st Jan 08. The best deal I can currently find is Britannia at 5.39% for 5 years. I need the security of a fixed deal and want to go for 5 years due to my personal circumstances.
I am aware the base rate might drop in the early months of next year. If the rate were to drop by .25% it would save me approx £1800 in mortgage payments in a five year period. Alliance and Leicester can offer me a 1.7% discount off their SVR. The product fee would be £400. There is no early redemption fee and no other fees.
Here is my dilemma..
If I were to go onto the Britannia deal now I might lose out if the rate were to drop.
If I were to go onto A&L discount I would add the fee to my mortgage which would cost a bit over time and my mortgage payments would be about £90 more than the Britannia rate. I would try to go onto a fixed rate if the rate dropped. However I know that banks and building societies don't always pass on the discount immediately.

I need to make a decision in the next few days as the mortgage process can take up to six weeks if I were to swap lender.
Any advice would be much appreciated.

mountainchrisriver

My advice would be to steer clear of the A&L deal as it is linked to their SVR and they do not have to drop this if the base rate drops (in fact I think Standard Life recently increased theirs even though base rates hadn't changed!) If you want to see what happens to fixes then why not go for a fee free lifetime tracker with no early redemption charges... sure a few companies do these through brokers... this may mean a slightly higher rate but does mean you can switch to another deal should fixes come down further... However, if you require the security of a fix over 5 years the one you have found seems pretty decent so why not just go with it? Fixes don't seem to have been coming down that much, even though swap rates have been falling recently... think mortgage companies are trying to keep their margins high owing to the so called "credit crunch".

HTH

ps. as an aside I am pretty sure that after 2 years of having a mortgage with Britannia you get some cash back each year... like a dividend...

Tishypoos

Thanks. Britannia give you £150 each year for staying with them

swanny65

Tishypoos wrote: »

Thanks. Britannia give you £150 each year for staying with them

They haven't given me £150.00. Remortgaged June 2006.

mountainchrisriver

Have to have had mortgage for 2 years swanny...

swanny65

Tishypoos wrote: »

Hello,
I would try to go onto a fixed rate if the rate dropped. However I know that banks and building societies don't always pass on the discount immediately.

I need to make a decision in the next few days as the mortgage process can take up to six weeks if I were to swap lender.
Any advice would be much appreciated.

Ask yourself why did you fix 5 years ago....... security and piece of mind probably. I have fixed for the same reason and am presntly on my 3rd 5 year deal. Only on the current one am i better off financially than the discount / SVR crowd, but i dont care as i wont risk not being able to afford the repayments.

I am also with Britannia and there staff are very good. My only concern is the recommended solicitor (Hammonds Direct) They were next to useless in helping me. Even denied receiving an email which i had a read receipt for!!!

iwassomeoneelse

Tishypoos wrote: »

I am aware the base rate might drop in the early months of next year.

I would only add one point to this - the fixed rate deals are generally funded from interbank borrowing (hence the Northern Rock issues) - which often already reflect any expected moves in base rates, especially as a remortgage often takes a couple of months to go through...

Tishypoos

Thanks for all your advice. I am going to talk to Britannia tomorrow.I may go on their ''no fee'' tracker mortgage with no early redemption (.4% above base rate). They offer free legal and valuation which is charged on the fixed rate. I was thinking that I could save this fee and then switch to their fixed product. Ok I have to factor in the extra repayment amounts and any mortgage review fee if I change product.