Time to change to a fixed rate?

spiritus

Currently on a variable mortgage of 0.5% over base rate with about £ 49k still to pay.

Saw a prediction yesterday that mortgage rates may stay around 4% for several years to come and so I was wondering if others are thinking of changing their mortgages for a fixed rate or just ride it out?

RelievedSheff

I don't think anyone can tell you what interest rates are going to do.

Whether to fix or not depends how risk averse you are. If you want the comfort of knowing what your repayments will be then a fix is likely to be the answer.

K_S

spiritus said:

Currently on a variable mortgage of 0.5% over base rate with about £ 49k still to pay.

Saw a prediction yesterday that mortgage rates may stay around 4% for several years to come and so I was wondering if others are thinking of changing their mortgages for a fixed rate or just ride it out?

@spiritus I personally would consider leaving it as it is, both because of the relatively small amount (so even a large jump in the rate might not make a huge difference to the monthly payment) and the fact that it's a great rate with presumably no ERC and something that you can't find in the market now.

But if your situation is such that a jump in rates (from the ~4-5% fixed rates available in the market now) makes it unaffordable, then it may be worth considering fixing.

I would suggest playing around with the mortgage calculator here to see how much the rate has to change to make it uncomfortable for you and then factor that in when making a decision.
https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

fewcloudy

spiritus said:

and so I was wondering if others are thinking of changing their mortgages for a fixed rate or just ride it out?

Many on here will be thinking of doing so, and some have done so. Others will decide not to.  On your rate and with your small mortgage I might be thinking about it but I certainly would not be doing it.

Out of interest, what difference does a 0.5% rise in interest rates make to your monthly repayments, if you don't mind me asking?

housebuyer143

fewcloudy said:

spiritus said:

and so I was wondering if others are thinking of changing their mortgages for a fixed rate or just ride it out?

Many on here will be thinking of doing so, and some have done so. Others will decide not to.  On your rate and with your small mortgage I might be thinking about it but I certainly would not be doing it.

Out of interest, what difference does a 0.5% rise in interest rates make to your monthly repayments, if you don't mind me asking?

Probably £10-£15 I would imagine. Not enough to warrant changing in my opinion.

raf300

Interesting thread as I was thinking the same  today.
However, would anyone think different if their tracker is 1.79% plus base? 

A 0.5% rise is around £25 increase a month. 

spiritus

fewcloudy said:

spiritus said:

and so I was wondering if others are thinking of changing their mortgages for a fixed rate or just ride it out?

Many on here will be thinking of doing so, and some have done so. Others will decide not to.  On your rate and with your small mortgage I might be thinking about it but I certainly would not be doing it.

Out of interest, what difference does a 0.5% rise in interest rates make to your monthly repayments, if you don't mind me asking?

These aren't exact figures but I ran a few projections through some mortgage rate calculators. It's always good to stress test your finances!

We're currently paying approx. £ 252 a month I think. If interest rates rise to 6% then we'd be paying an extra £ 100 a month so it passes my stress test.

Of course, everything else is going up too so any additional cost is a burden. 

fewcloudy

Is it too simplistic to say you should just overpay by that extra £100 and get shot of the lot considerably quicker?  I guess as you say higher bills all round don't make it easy. When my mortgage was down to about 50k, the payment demanded each month was only about £300 but I was paying up to £1000 a month when I could, as that was the amount we budgeted for/agreed when we bought the house and started the mortgage.

I know that whenever I mentioned that on here, there was always someone who said "You fool!, why are you paying down debt on such a low rate of interest, you should be doing XYZ" etc.  They may have been right who knows but overpaying a bit worked for me.

tdawber

yes pay as much as what you can afford.
its gonna cost all mortgage owners a LOT more £ in the long run in interest 😕