So.....I'm in a fixed rate mortgage
Discussion
Just wanted to gather the thoughts of the PH crew on this one.
I'm on a 10 year fixed rate mortgage, and I'm just over half way through it. It's with Woolwich at 4.98%. (V annoying as I could have had a 0.17% tracker at the time! Grrr Hindsight).
Anyway, I've got loads of equity, so could get a deal (like the Tesco's one) at 1.99% fixed.
Problem is......there's a 6% exit penalty from the existing deal, which I know I will recoup within the next 2 years or so, so it would save me money over the remaining 3 years.
The other thing to throw into the consideration is that the rate defaults to 0.99% tracker after the 10 years ends in 2017, which I am unlikely to ever get again (i.e. the Tescos deal will likely be much higher at the end)
What should I do????? Stick or Switch!
I'm on a 10 year fixed rate mortgage, and I'm just over half way through it. It's with Woolwich at 4.98%. (V annoying as I could have had a 0.17% tracker at the time! Grrr Hindsight).
Anyway, I've got loads of equity, so could get a deal (like the Tesco's one) at 1.99% fixed.
Problem is......there's a 6% exit penalty from the existing deal, which I know I will recoup within the next 2 years or so, so it would save me money over the remaining 3 years.
The other thing to throw into the consideration is that the rate defaults to 0.99% tracker after the 10 years ends in 2017, which I am unlikely to ever get again (i.e. the Tescos deal will likely be much higher at the end)
What should I do????? Stick or Switch!
audi321 said:
Just wanted to gather the thoughts of the PH crew on this one.
I'm on a 10 year fixed rate mortgage, and I'm just over half way through it. It's with Woolwich at 4.98%. (V annoying as I could have had a 0.17% tracker at the time! Grrr Hindsight).
Anyway, I've got loads of equity, so could get a deal (like the Tesco's one) at 1.99% fixed.
Problem is......there's a 6% exit penalty from the existing deal, which I know I will recoup within the next 2 years or so, so it would save me money over the remaining 3 years.
The other thing to throw into the consideration is that the rate defaults to 0.99% tracker after the 10 years ends in 2017, which I am unlikely to ever get again (i.e. the Tescos deal will likely be much higher at the end)
What should I do????? Stick or Switch!
Even if you stay with the Woolwich, you have no idea where the base rate will be in 2017. Base+ 0.99% might be decent now but that could be above your current rate by then.I'm on a 10 year fixed rate mortgage, and I'm just over half way through it. It's with Woolwich at 4.98%. (V annoying as I could have had a 0.17% tracker at the time! Grrr Hindsight).
Anyway, I've got loads of equity, so could get a deal (like the Tesco's one) at 1.99% fixed.
Problem is......there's a 6% exit penalty from the existing deal, which I know I will recoup within the next 2 years or so, so it would save me money over the remaining 3 years.
The other thing to throw into the consideration is that the rate defaults to 0.99% tracker after the 10 years ends in 2017, which I am unlikely to ever get again (i.e. the Tescos deal will likely be much higher at the end)
What should I do????? Stick or Switch!
I'd work purely on the known figures of;
The total of the next 60 months payments with the Woolwich.
Vs.
The total of the next 60 months payments with Tesco including 36 on the SVR (also taking into account the ERC's to Woolwich and the costs of setting up the new mortgage)
I'd be suprised if two years at 1.99% saved you enough to justify switching and paying the ERC's and new set up costs.
I was on a 6% fixed rate mortgage, taken out a couple of months before Gordon Brown tore up his stated fiscal policy of keeping inflation below 2.5%. I bought my way out cost me around 4K at the time and took out an offset tracker, made the money back in less than a year and have been able to pay a lot more off my mortgage ever since.
At the end of the day it comes down to what do you think interest rates are going to do over the next 5 years, if you think they are going to stay the same then you can buy yourself out, if you think they are going to go up then after your short term fix is over you could end up paying more than you do now. How good is your crystal ball? Mine as evidenced by the 6% fix is somewhat dodgy!!
At the end of the day it comes down to what do you think interest rates are going to do over the next 5 years, if you think they are going to stay the same then you can buy yourself out, if you think they are going to go up then after your short term fix is over you could end up paying more than you do now. How good is your crystal ball? Mine as evidenced by the 6% fix is somewhat dodgy!!
I don't really see how you'll be better off by switching if its going to take you 2 years to recoup your money you've spent on fees.
In two years you MIGHT be paying 4.24% SVR instead of 4.98%, will paying 0.74% over 3 years make that much difference to you?
The difference could be even closer, who knows?
Three years after this with your current mortgage you could be paying 0.99% instead of 4.24%.
I'm not a FA but I doubt very much that even in 2017 you would be able to get a tracker mortgage for 0.49% above base rate.
In two years you MIGHT be paying 4.24% SVR instead of 4.98%, will paying 0.74% over 3 years make that much difference to you?
The difference could be even closer, who knows?
Three years after this with your current mortgage you could be paying 0.99% instead of 4.24%.
I'm not a FA but I doubt very much that even in 2017 you would be able to get a tracker mortgage for 0.49% above base rate.
audi321 said:
Just wanted to gather the thoughts of the PH crew on this one.
I'm on a 10 year fixed rate mortgage, and I'm just over half way through it. It's with Woolwich at 4.98%. (V annoying as I could have had a 0.17% tracker at the time! Grrr Hindsight).
Anyway, I've got loads of equity, so could get a deal (like the Tesco's one) at 1.99% fixed.
Problem is......there's a 6% exit penalty from the existing deal, which I know I will recoup within the next 2 years or so, so it would save me money over the remaining 3 years.
The other thing to throw into the consideration is that the rate defaults to 0.99% tracker after the 10 years ends in 2017, which I am unlikely to ever get again (i.e. the Tescos deal will likely be much higher at the end)
What should I do????? Stick or Switch!
What size is the loan?I'm on a 10 year fixed rate mortgage, and I'm just over half way through it. It's with Woolwich at 4.98%. (V annoying as I could have had a 0.17% tracker at the time! Grrr Hindsight).
Anyway, I've got loads of equity, so could get a deal (like the Tesco's one) at 1.99% fixed.
Problem is......there's a 6% exit penalty from the existing deal, which I know I will recoup within the next 2 years or so, so it would save me money over the remaining 3 years.
The other thing to throw into the consideration is that the rate defaults to 0.99% tracker after the 10 years ends in 2017, which I am unlikely to ever get again (i.e. the Tescos deal will likely be much higher at the end)
What should I do????? Stick or Switch!
Edited by darreni on Wednesday 31st October 19:48
Gassing Station | Finance | Top of Page | What's New | My Stuff