Remortgage Deal!

[Psycho Sonny]

Currently on a 1.54% lifetime tracker (inc BOE), I can get a 1.69% 5 year fix, seems a no brainer but the principle of paying more per month keeps me on the 1.54% tracker. By the time an actual genuine BOE rate rise gets announced and not held again, i'd guess that 1.69% fix would be long gone!

I also think after the 1.69% 5 year fix finishes i'd then be at the mercy of rates in 5 years time, although this is backwards thinking as the same would apply to my current tracker in 5 years lol

IMO trackers are just waiting for the inevitable. if rates rise you will be screwed and they will rise the BOE even told us all this after the last vote. you should fix for 5 years. then overpay as much as you can so that in 5 years time it doesn't matter what the interest rate is as your mortgage will be pennies regardless.

 

[Mercenary Keyboard Warrior]

Well a tracker is just a tarted up variable interest rate product. It just means the banks margin is known as opposed to being at their choice.
They made more sense when over payments were more restricted to people who may have had quite variable income, over time as fixed products have become less rigid the gains from being on a variable have declined.

Saying that, trackers are a nice offering if rates are relatively high and there is a good chance of a drop. Sometimes this is priced into fixed, but often its not

 

[toprock]

Aye makes sense Sonny, although I look back on the last 7 years on a tracker, and have had my bluff called every year with 100% rise in interest rates

 

[Psycho Sonny]

Aye makes sense Sonny, although I look back on the last 7 years on a tracker, and have had my bluff called every year with 100% rise in interest rates

That is due to the financial crisis that happened. At the last vote 2 of them voted for an increase was it. That has never happened before in the past decade. You have been officially warned it's going to happen. I reckon it will only be small and possibly temporary due to Brexit. But IMO now is the time to fix if your on a tracker 2,3 or 5 years is your choice depending on how you think Brexit will impact it all. It will be going up soon they have told us this so staying on a tracker for the past 7 years was smart. Now not so.

 

[Pulsedriver]

I am at that moment for renewal, my current deal (2 year fixed @ 1.64%) ends at the end of the month, current provider has given me 2 options;

2 year fixed @ 1.54% (drops the monthly payment by £7)

5 year fixed @ 1.99% (increases the monthly payment by £28)

Both have no fee for switching, although no cashback incentive or anything like that.

Tempted by the 2 year at the moment... My current LTV is 58%

 

[Psycho Sonny]

I am at that moment for renewal, my current deal (2 year fixed @ 1.64%) ends at the end of the month, current provider has given me 2 options;

2 year fixed @ 1.54% (drops the monthly payment by £7)

5 year fixed @ 1.99% (increases the monthly payment by £28)

Both have no fee for switching, although no cashback incentive or anything like that.

Tempted by the 2 year at the moment... My current LTV is 58%

Your already on the lowest LTV band. I'd just fix for 2 years as 0.5% is only pushing you up by £35 a month in total. I'd then use that spare £35 a month and just overpay in order to make your next renewal better.

 

[Ace Modder]

Your already on the lowest LTV band. I'd just fix for 2 years as 0.5% is only pushing you up by £35 a month in total. I'd then use that spare £35 a month and just overpay in order to make your next renewal better.

agreed!

 

[Mercenary Keyboard Warrior]

I am at that moment for renewal, my current deal (2 year fixed @ 1.64%) ends at the end of the month, current provider has given me 2 options;

2 year fixed @ 1.54% (drops the monthly payment by £7)

5 year fixed @ 1.99% (increases the monthly payment by £28)

Both have no fee for switching, although no cashback incentive or anything like that.

Tempted by the 2 year at the moment... My current LTV is 58%

Alternatively, depending on your situation fix for 5, it really depends on your disposable income vs mortgage IMHO, and its always this way, whats your coverage in regards ability to pay if rates rise.
Take 2 years with £35 saving, thats £840, lets call it £860 assuming you do pay off as it will save a minimal amount of interest and hence reduce capital outstanding at the end of 2 years (its less than this in reality but we will round up a fair bit)
Lets assume rates have gone up by this point, your guess is as good as anyones, we know its coming, its inevitable, we just don't know when.

To be better off on the longer term fix you need to save more than £860(ish) to have been better fixing for longer. £860/36 (diff between 2 and 5 year fix) is £24 pcm
As we know £35 is from 0.45% rate diff for you on our term and outstanding, we can calculate that roughly 24/35*0.45% = 0.31% increase for 3 years would put you in the same position. As rates typically move by 0.25% your talking 2 rises, thats very much within the reality of what could happen. Obviously rates may rise any time, if they rose 1% in 4 years time you would be roughly the same situation 0.31% over 3 years.

I will throw another one out that some people know and some don't, depends on your situation. Its minmax maxmin, basically its saying based on your situation do you feel inclined to maximise your minimum payments (but risk paying more if rates go up later) or to minimise your maximum payments (by fixing for longer at the risk of paying more if rates remain low).

Hope the few numbers help

Last point, not sure how long you have been around, but fixed rates tend to go up quickly when they expect rate rises, or terms reduce significantly, or both. By the time rates start rising its too late to fix they will already have priced it into the products.

 

[Pulsedriver]

At the moment, the current payment is OK, I could possibly stretch another £30 or so a month, but no higher, that is why the 5 year fixed looked tempting based on the fact it was a solid payment I would know would stay for the next 5 years. 2 Year is nice as it's slightly lower per month, but in 2 years if the rates have risen a lot more, it could cause an issue... (Of course it's a big IF with rate rises).

 

[Mr.Stu]

If budget is that tight, then go for the 5 year fixed.

 

[Mercenary Keyboard Warrior]

At the moment, the current payment is OK, I could possibly stretch another £30 or so a month, but no higher, that is why the 5 year fixed looked tempting based on the fact it was a solid payment I would know would stay for the next 5 years. 2 Year is nice as it's slightly lower per month, but in 2 years if the rates have risen a lot more, it could cause an issue... (Of course it's a big IF with rate rises).

Absolutely, as I say often, whats more important than the headline rate is affordability, something that many others choose to ignore.
You are probably a candidate for minmax in this case, limit the maximum you can pay.

Just a snippet from latest inflation news topic.
"Before the figures came out, traders in the City had anticipated a rise in interest rates by next May. Now they're betting it's more likely to happen next February. "

Its total guesswork don't forget, but based on current trends we will some rate impact sooner or later thats certain. BUT there is a fairly good chance that Brexit could cause them to drop again if they do go up.

 

[Psycho Sonny]

At the moment, the current payment is OK, I could possibly stretch another £30 or so a month, but no higher, that is why the 5 year fixed looked tempting based on the fact it was a solid payment I would know would stay for the next 5 years. 2 Year is nice as it's slightly lower per month, but in 2 years if the rates have risen a lot more, it could cause an issue... (Of course it's a big IF with rate rises).

if you can't afford £30 a month then i'm surprised you got that mortgage at all as well as your LTV. you would be better off fixing for 10 years if that is the case.

 

[Pulsedriver]

if you can't afford £30 a month then i'm surprised you got that mortgage at all as well as your LTV. you would be better off fixing for 10 years if that is the case.

It's not so much that, it's more that at the moment with all the bills etc the current payment amount works out well, so spending another £30 or so a month is ok, but I am basing everything on my current bills/setup that I have had for the last 2 years, so it just allows me to breathe easier rather than up the payments a lot more.

 

[Psycho Sonny]

It's not so much that, it's more that at the moment with all the bills etc the current payment amount works out well, so spending another £30 or so a month is ok, but I am basing everything on my current bills/setup that I have had for the last 2 years, so it just allows me to breathe easier rather than up the payments a lot more.

If you want to breathe easy. Every spare penny you have should either be invested or used to overpay your mortgage

 

[HungryHippos]

If you want to breathe easy. Every spare penny you have should either be invested or used to overpay your mortgage

Also worth having at least 3 months worth of "living expenses" either in the bank or as reasonably liquid investments imo.

 

[Mercenary Keyboard Warrior]

Also worth having at least 3 months worth of "living expenses" either in the bank or as reasonably liquid investments imo.

Aye, absolute minimum is 3 months, 6 is best, 12 is belt and braces, for a stress free how will i pay the mortgage type scenario
Saying that the easier you will find a job the lower you can reasonably set, the higher paid and or specialised you are the longer you want to be able to carry on with no job.

If you saving relatively small amounts, the regular saver accounts (such as virgin £250pcm @ 2.23%) or (Santander £200 at 5%) are perfect for the rainy day fund. They help particularly because you know you cant just put the money back at a alter date so its ok just to dip in to buy that new phone or whatever

 

[HangTime]

That is due to the financial crisis that happened. At the last vote 2 of them voted for an increase was it. That has never happened before in the past decade.

That's not true. It's happened multiple times over the past decade, take 2014 for example, there were multiple members voting for a rise five months in a row.

 

[toprock]

I am at that moment for renewal, my current deal (2 year fixed @ 1.64%) ends at the end of the month, current provider has given me 2 options;

2 year fixed @ 1.54% (drops the monthly payment by £7)

5 year fixed @ 1.99% (increases the monthly payment by £28)

Both have no fee for switching, although no cashback incentive or anything like that.

Tempted by the 2 year at the moment... My current LTV is 58%

1.99% is too high, why not move to hsbc/first direct, with your LTV can get 1.69% afaik over 5 year fixed.

Issue i'd have with 1.54% 2 year fix would be the inevitable rates after the 2 years are up.

 

[Mercenary Keyboard Warrior]

Base rate kept on hold, but sounding like that rise is coming sooner and sooner

"This morning, traders in the City viewed a rate rise as more likely than not by February, now they expect it by December."

If your thinking of jumping on a fix do it quickly. The banks take a little while to adjust but not long

http://www.bbc.co.uk/news/business-41266528

 

[chroniclard]

Just fixed for 5 years, 1.9% with Natwest, about 150 less per month which we will spend on Gin.