[JLR1969]

I am in the process of taking a new mortgage, i can stay with the previous lender C&G with a variable rate of 2.5%.

My feeling is that over the next 3-6 months the BOE base rate is set to increase by +0.5% with other increases to follow.

I am looking to get a 5 year fix rate and the best I can find is 3.39% with a £1000 arrangement fee.

I will be worse off by about £90 a month if the rates don't rise but given the economy feel a lot happier being fixed for 5 years which is 50% of the remaining term.

What are your views?

[jjbirch530d]

i took out a mortage in 2006 on a place i used to live, its a tracker at 0.50 above base rate in 06-07 its was something like £750-800 a month now its £110 i cant see anything happening next year with rates maybe 2013 whats the best tracker out there, then fix it in 2013 i would say

[JLR1969]

Originally Posted by jjbirch530d

i took out a mortage in 2006 on a place i used to live, its a tracker at 0.50 above base rate in 06-07 its was something like £750-800 a month now its £110 i cant see anything happening next year with rates maybe 2013 whats the best tracker out there, then fix it in 2013 i would say

I have spoken with quite a few people all of which say the base rate will go up next year, due to the economy any Europe it has to.

It's anyone's guess.

[jjbirch530d]

i was told to fix it in 2010 if i listen to them i would be 5k out of pocket the question is can you afford to pay if it rises if so i would ride it out

[M3-FAST]

Originally Posted by jjbirch530d

i was told to fix it in 2010 if i listen to them i would be 5k out of pocket the question is can you afford to pay if it rises if so i would ride it out

1 same here, just got the lowest mortgage I could find, 0.5 above base i think and am overpaying by about 250 per month. If and when the interest goes up I will just reduce the overpayment. Kinda got used to paying that amount now for the last year or so!

[BanziBarn]

3.39% seems like a quite good deal for piece of mind.

I'm not going to fix mine though, although defo would if owed more.

Uncertain times ahead!

[JLR1969]

We would not have a problem paying the extra but for peace of mind £90 a month seems worth it. If the rates increased by 0.5% then the £90 a month would reduce to £45.

If I had not sold the other house then i would stay on the 2.5% but as most of the fees will be paid by the relocation company the extra per month seems prudent. One thing is for certain the rates are not going to reduce.

It's only a matter of time before they rise, the million dollar question is when and by how much.

That's the gamble I guess.

[jjbirch530d]

makes me so mad that the fee is £1000, when people change sometimes they dont take the fee into account,they just see the monthly bit,
banks are robbing C**TS

[peterg1965]

The ECB has just lowered rates to an historic low (1.0%), most commentators I read predict that the BoE base rate may del stay at 0.5% for a long time yet, some suggesting into 2013 and maybe beyond.

The European debt crisis is far from solved and it is likely that the UK economy is going nowhere in terms of growth, for a while yet, why would the Bank of England raise rates in the short term?

Having said that, I can't see mortgage rates being lower than they are now so a 3.39% fix for for years is probably not too bad in my book.

[briers]

I know it probably doesn't apply to you Jon but I always say don't go for fixed for comfort because if the interest rate does rise within the 5 years you will have a massive shock when you come to remortgage. Eg if boe rate is 4% and cheapest mortgage is nearly 6%.

I always budget for 6% and take a tracker. I currently have a tracker 0.25% above boe with a 2% floor. So it's 2.25%.

Don't forget, if it's 0.5% above boe rate and boe increases in0.5% steps it would have to rise 4 times before yours goes up.

[Boyd1963]

I would stick with the Variable rate. I've had fixed rates for the last 15 years and been consistently worse off. Just get it paid off as quick as possible. My wife calculated that paying our mortgage off early will have saved us £30k. For the last 3.5 years we have used our parents to offset against our fixed rate of 5.99% so have managed to give them a reasonable amount of interest.

[rogerxp]

I'm afraid I don't have a crystal ball but if you wanna chat to my mortgage man just drop me a pm and I'll put you in touch - he's been pretty good at predicting the future for my mortgage.

[JLR1969]

Thanks for your comments guys a bit more research and then a decision by Friday.

[Vaheed1]

I'd recommend you take Roger up on his offer to speak to his contact - Although I never went with his recommendations in the end, he certainly know's his shit.

After months of searching a researching, we finally decided on a fixed for 3 years at 4.08% - with 15% down. Of course, it all depends on how much you borrow.

[JLR1969]

Originally Posted by Vaheed1

I'd recommend you take Roger up on his offer to speak to his contact - Although I never went with his recommendations in the end, he certainly know's his shit.

After months of searching a researching, we finally decided on a fixed for 3 years at 4.08% - with 15% down. Of course, it all depends on how much you borrow.

I am favouring 3.39% fixed for 5 years with a £999 fee. £600 of the fee is paid by girlfriends employer.

It's then £80 a month more than a 2.5% variable rate but if rates rise over the next 5 years I am feeling happy and protected if not then £80 is not the end of the world for piece of mind. Could always pay off the mortgage in 5 years time if the rates are sky high.

[225_AB]

With growth so weak I see little immediate prospect of a rise in base rates. Sure rates will raise but not for some time yet. Even when they rise they would need to rise several times to exceed your fixed rate. You also will be paying £399 of the fee. But only you can decide what gives you the best nights sleep. On a SVR mortgage you are also free to remortgage with no penalties generally.

[kaishang]

IMHO it does not make sense unless your borrowings are quite large and a series of rate rises would put you in financial hardship or force you to sell.

£1000 application fee amortised over 5 years is £200/year. That is equivalent to 0.2% per $100k of borrowing. Actually more, since you add the application fee to the loan or pay it upfront; you will either be paying interest on it directly or it is money not reducing the interest on your loan.

Also rate rises tend to go up in 0.25% increments. You therefore need 4 x rate rises before you are ahead on the interest rate (or perhaps it would be 1 x 0.5% + 2 x 0.25% rises).

What happens after 5 years? Chances are if you do not refinance then the margin over the BOE rate which you will revert to will be a lot higher than the margin over the BOE rate which is giving you 2.5% now.