Renegotiating the mortgage

[zax]

We'll be having a chat with the bank next week about changing the terms of our mortgage. 25 year loan taken out around 5 years ago, interest rate was fixed based on Euribor 12 month rate which was rather higher at the time than it is now - I'm currently paying 5.8%.

Mortgage is a sensible one so making the payments isn't a problem even if rates should suddenly shoot upwards. But it's always nice to save a little

If you were taking out a loan in these strange times, what terms would you prefer? Fixed based on 12 month rate, or 3 month rate? Or tracker? I'm in the euro zone, not in the UK.

I'll leave the question of what do do with the portion of my savings currently shrinking in a sterling account in a UK bank for another day

[Chris_w666]

SCOTAL!

[scotal]

ultegra said:

I would go for a tracker for the next 3 years. Then reassess. Mortgages are a bit like being a pygmy in long grass: you strike off in one direction, but every so often you have to jump up and do a "where the fukawi?".

Try fool.co.uk to compare whats out there right now.

They update their website pretty quickly to show new deals, but the best way to get the best out of them is to complete the online enquiry and get one of their bods to call you to discuss your needs.

Worked for us - Mrs Ultegra did precisely this in October and we slashed 5 years off our term for the same amount. Since then it has tracked down and we are saving £625 per month.

Edited by ultegra on Monday 12th January 11:55

He's in Europe, Fool isnt going to be a whole load of help is it?

OP, whats your steer on Euro rates? What are your local media saying about rates, are they as obsessed as the UK media. (do they think Euor rates will fall, remain stable, dip and then return?
Does the margin charged on the 12 month fix differ from the 3 month? Does the tracker have a floor? Are you more comfortable knowing your payments for a given period,at the risk of missing a dip, or are you happy taking the risk of rates rising?

[zax]

Thanks for the replies so far...

I'm told the Euribor rate should drop a little this week, but let's see.

As for specific products I can choose from, for the current provider at least it's fixed interest based on Euribor 1, 3, 6 or 12 months, fixed interest period for 3, 5, 10 or 15 years. Instead of the euribor rate I can use the bank's "prime" rate, which seems to track Euribor 12 month plus or minus 0.5% depending on their mood...

I can also have an interest rate "cap", which they will of course charge me for (no idea how much, it's "price on application" )

[ultegra]

I didnt RTFQ.

Somebody shoot me.

Edited by ultegra on Monday 12th January 12:12