SVR or fix?

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?

amanda1024

There are various calculators here: https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/ - but you'd need to find out what rates you could get on SVR vs fixed rate mortgage vs savings (presumably regular savings if you'd be adding to them each month). Remember to also include arrangement fees etc - particularly for the fixed rate mortgage option. And (obviously!) the SVR could go up so think about if you'd put a value on certainty versus the potential to save a bit. 

Andreg

As your mortgage balance is relatively small, you need to avoid a fix with high fees as these might outweigh the interest savings.  Just looking at one lender as an example, there are 2 year fixed fee saver mortgages available with no fees and an interest rate of 5.84% which is obviously better than paying standard variable rate of 6.99%.  You may be able to make limited overpayments to reduce the balance of the mortgage, and any extra you can save can be used as lump sums to reduce the balance when your current fix ends and when your next fix ends.