Fixed at 4% or Variable at 2.6%?

anotheruser

My mortgage is coming up for renewal.
I'm not sure whether I am on a fixed rate or not - I assume so as my payments over the last 2 years or so haven't changed.

I'm going through a broker questionaire now and it's asking whether I want to fix or not but I'm not sure.
When I click on fixed, it says:

2.28% fixed, then 4.24% variable 4% APRC

When I click on variable is says:

1.25%, then 3.35% variable 2.6% APRC

I know rates will likely go up over the next year and I don't mind fixing my payment for another 2 or 3 years or so but does this mean I will pay the higher 2.28%?

Cheers

Edi81

Your most recent mortgage statement will confirm if you are on fixed or variable at the moment. 

That variable looks more like a discounted tracker (and looks a tad light). 

You need to assess your attitude to risk of interest rates going up and what you can afford.
also, value of mortgage is critical the difference on a small value is marginal but on £500k will be noticeable. 

K_S

@anotheruser If that's a mortgage broker fact-find that you are filling in before speaking with an adviser, don't stress too much about which option you pick and the rates shown at that stage. The rates that show up might often not apply to you or be inaccurate.

When you speak to them, you can ask about both options (fixed and tracker/discount rates), get the 'best' rate for both that is available to you and then think about what route you would like to take. As an example, the 1.25% discount rate looks like it's the chart-topping Stafford Railway BS rate but wouldn't have checked that you actually tick the boxes required to get that rate. 

As the poster above said, it often boils down to your attitude to risk and how much you value the peace of mind of a monthly payment that won't change for x years.

housebuyer143

If 2.28% is 2yr FX personally I would have the cheaper tracker or discount rate. 
You would need base rate to go to another 1% to just break even here with the fixed rate. 
It's all about your attitude to risk and if you don't mind having variable payments. 

Sistergold

anotheruser said:

My mortgage is coming up for renewal.
I'm not sure whether I am on a fixed rate or not - I assume so as my payments over the last 2 years or so haven't changed.

I'm going through a broker questionaire now and it's asking whether I want to fix or not but I'm not sure.
When I click on fixed, it says:

2.28% fixed, then 4.24% variable 4% APRC

When I click on variable is says:

1.25%, then 3.35% variable 2.6% APRC

I know rates will likely go up over the next year and I don't mind fixing my payment for another 2 or 3 years or so but does this mean I will pay the higher 2.28%?

Cheers

Yes you will pay 2.28% if you choose that particular fix. 

Thrugelmir

housebuyer143 said:

You would need base rate to go to another 1% to just break even here with the fixed rate. 

Base rate currently sits at 0.75%. There's some forecasts already pencilling in a 2% base rate in 12 months time. 

Expectations are that base rate in the US may reach 2.75% in 2023. 

The one certainty is that the tide has finally turned whatever the final outcome. 

Tranboy

If you factor in the charges, typically £1k, then a longer fix could make more sense, with so much going on in the world anything could happen to interest rates over the next few years , the only probability Is up.

housebuyer143

Thrugelmir said:

housebuyer143 said:

You would need base rate to go to another 1% to just break even here with the fixed rate. 

Base rate currently sits at 0.75%. There's some forecasts already pencilling in a 2% base rate in 12 months time. 

Expectations are that base rate in the US may reach 2.75% in 2023. 

The one certainty is that the tide has finally turned whatever the final outcome. 

That's why I said it's their preference to risk. If they think the base rate will only go up 1 % more in 2yrs then don't fix. 
No one can predict it so everyone just has to decide for themselves what will happen 

anotheruser

We've always had a fixed rate to pay each month.
I have made peace with the fact I will be paying it off until I am 50 or so, unless I won the lottery, which I don't play.

I'll fill in the form more accurately and then someone will call me back where I can discuss.

fewcloudy

Tranboy said:

If you factor in the charges, typically £1k, then a longer fix could make more sense, with so much going on in the world anything could happen to interest rates over the next few years , the only probability Is up.

Well that is clearly wrong.

london21

I like fixed for the certainty.