Standard Variable Rate or Fix again?

keldac

I have 4 years left on my mortgage with an outstanding balance of £27,000. My very low fix is due to end at the end of the year. I am considering going to the SVR and not fixing again as I am able to overpay about £250 every month. However, I am not particularly good at crunching the numbers and not sure whether I would be better fixing again for 2 years and saving the money to pay a lump sum off the mortgage at the end of the fix. Any clues or any calculators you can point me in the right direction to please?

Baileys_Babe

If you went with a fix you can usually make some over payments without penalties - varies by product and lender. You could then save any extra you had for over paying to pay a lump sum off at the end of the fix.

You could also look at reducing the term of your mortgage that way your money for over paying would be incorporated into your regular payment. Your likely to be able to shave about 12 months off the term.

frugal_lass

The issue I found is the calculators can’t take all factors into account. Most mortgages only allow you to pay off up to 10% without penalty. So it depends on how quickly you are able to pay it off and what types of mortgages are available. Once your mortgage is below a certain amount the mortgages options become limited. Have you read this? https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/?_ga=2.46863079.131999496.1692084496-537559992.1692084496

I will be going to SVR because I will not take long to pay it off. In your case you may want to have a chat with a broker and then put your numbers through the overpayment calculator. Good luck!

Exodi

Just FYI - If you didn't want to fix, you'd switch to a tracker as it will almost certainly be lower than the SVR

As I see it, this is just a typical fix vs tracker thread, as a 2/3 year fix would still be fine in your circumstances, even with your overpayment plans (as even if you did fix and reach the max overpayment - usually 10% of the total balance - you could just put anything extra in a top paying savings account and pay off as a lump sum when the fixed term expires). A tracker you can pay overpay as much as you like.

No-one will comment whether a fix or trackers will be better over the next couple of years because that's unfortunately crystal ball stuff.

beanielou

Better posting this on the mortgages & endownments thread 

keldac

beanielou said:

Better posting this on the mortgages & endownments thread 

I have done! I only saw that section after I posted here and couldn't find out how to delete it. That said, there's more comments here :-)