Switching mortgages now - madness?
Discussion
I am currently on a fixed rate of 6.55%, tied in for 2.5yrs. The redemption fee for switching is currently £3200.
If i switch to a tracker, following from yesterday's interest cut, I have been offered a rate of 4.59%, which will result in a saving of around £100 per month.
The maths tell me the fees for redemption and arrangement would be around £4000. The fees can be added to my current mortgage, pushing the LTV up, but without paying out more now. The saving would be around £3600 at present, but more should rates drop further, obviously.
I am not too keen to increase the amount owing, as my LTV is quite high already ( around 85%) but the saving of £100 per month would be nice.
Would i be mad to move, or would it be a wise move given current rates and my current %?
If i switch to a tracker, following from yesterday's interest cut, I have been offered a rate of 4.59%, which will result in a saving of around £100 per month.
The maths tell me the fees for redemption and arrangement would be around £4000. The fees can be added to my current mortgage, pushing the LTV up, but without paying out more now. The saving would be around £3600 at present, but more should rates drop further, obviously.
I am not too keen to increase the amount owing, as my LTV is quite high already ( around 85%) but the saving of £100 per month would be nice.
Would i be mad to move, or would it be a wise move given current rates and my current %?
scotal said:
Number 5 said:
i'm just about to fix mine for 26 months at 4.69% saving me £130 on my current deal
Why now? Why not wait for a week or so to see if the lenders feed the rate cut into thefixed market?There might be slight downward revisions as LIBOR drops too, but these will only be tiny as on a fixed rate the lender has to hedge what the rate will do over the next 2/3/5/10 years.
gti tim said:
I am currently on a fixed rate of 6.55%, tied in for 2.5yrs. The redemption fee for switching is currently £3200.
Currently, does it fall over time?gti tim said:
If i switch to a tracker, following from yesterday's interest cut, I have been offered a rate of 4.59%, which will result in a saving of around £100 per month.
Why a tracker? You are tracking @ 2.59 over, with pershaps 1% of rate cut to go.What happens if it spikes up? Have you gone for a lender who will allow you to fix into their current rates without ERC's becoming payable?
oyster said:
But won't the lenders have already priced any forecast cuts into their fixed rates anyway? And indeed all their products.
No, not yet. It took all of last month to even begin to see fixes dropping towards the 3% base. Mianly becase it took most of last month for LIBOR to drop under 4%.
scotal said:
oyster said:
But won't the lenders have already priced any forecast cuts into their fixed rates anyway? And indeed all their products.
No, not yet. It took all of last month to even begin to see fixes dropping towards the 3% base. Mianly becase it took most of last month for LIBOR to drop under 4%.
oyster said:
Ahhh, I thought the lenders took a much more balanced and hedged view when pricing products and less of a view on what LIBOR/Base rates are right NOW.
You give them more credit perhaps you should. I wouldnt pretend to know the ins and out of high level mortgage funding, but I do know that offering a 2 year fixed rate doesnt mean the lenders have brought a complete package fo 2 year money.3 month LBIOR is the benchmark for a lot of their funding.
scotal said:
I am currently on a fixed rate of 6.55%, tied in for 2.5yrs. The redemption fee for switching is currently £3200.
Currently, does it fall over time?
Just checked - when taken out, SVR was 7%, now at 5% so will be a fall of 1.55% when fixed deal ends.Currently, does it fall over time?
Was thinking of tracker in order to reduce payment in short term, given current low rates. Am not the wisest of people when it comes to mortgages though, hence sounding my idea here (for free) before contacting my FA.
gti tim said:
Was thinking of tracker in order to reduce payment in short term, given current low rates. Am not the wisest of people when it comes to mortgages though, hence sounding my idea here (for free) before contacting my FA.
No offence, but get him to do the sums, get him to run through the options with you. (Does he charge fees? If so, make sure he's not going to for just doing some sums.)Personally I'd be keeping an eye on the fixed rate market.
gti tim said:
scotal said:
I am currently on a fixed rate of 6.55%, tied in for 2.5yrs. The redemption fee for switching is currently £3200.
Currently, does it fall over time?
Just checked - when taken out, SVR was 7%, now at 5% so will be a fall of 1.55% when fixed deal ends.Currently, does it fall over time?
Had the same conversation with my financial advisor this morning.
He reckons to wait till January for another 1% drop in base rate then wait a couple of months for the banks/building socitites to follow suit THEN change current tracker for a fixed rate for 10 years or so.
I know he cant predict the future but so far he has been spot on regarding the rate cuts im beginning to wonder if he is a spy......
He reckons to wait till January for another 1% drop in base rate then wait a couple of months for the banks/building socitites to follow suit THEN change current tracker for a fixed rate for 10 years or so.
I know he cant predict the future but so far he has been spot on regarding the rate cuts im beginning to wonder if he is a spy......
I think i shall be waiting a bit then. It was purely to get my outgoings down in the immediate future, but looking at it, i would be as well to wait for a decent long term fixed rate.
Only problem i have it LTV is over 75% given current house prices which limits the number of offers open to me, but i am sure there will be something there worth moving to, given my current high rate.
Only problem i have it LTV is over 75% given current house prices which limits the number of offers open to me, but i am sure there will be something there worth moving to, given my current high rate.
£100 per month, 2.5 years = 30 months, you will save £3000
To get that rate you have to pay £200 more than you will save
The fixed rate will not change, the tracker can change
Why are you even considering dumping a fixed rate to pay more on a tracker after paying £3200 to get out of it ?
chances are the rates might drop a bit...but they might not
To get that rate you have to pay £200 more than you will save
The fixed rate will not change, the tracker can change
Why are you even considering dumping a fixed rate to pay more on a tracker after paying £3200 to get out of it ?
chances are the rates might drop a bit...but they might not
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