Money Experts - mortgage and interest rate advise
26 July 2017, 06:06 PM
#1
Money Experts - mortgage and interest rate advise
Hello people.
My fixed term mortgage is coming to an end in 3 months, so I can start looking for a deal now.
I'm currently with Yorkshire Bank, and the new deals they have to offer are middle of the road at 1.89% with no fees whatsoever being an existing customer. Now if we move to a new lender I can get a rate of ~1.1% which would mean a 2 year saving of apx £960, but I would need to pay arrangement and valution fees which could match the savings thus be non-economical moving lenders.
So my questions to you are, do you think the interest rates will shift during the next few months as I have a suspicion they will reduce by a 0.1-0.25 fraction meaning a possible saving of £500 over the term....
Do I sign the deal 1.89% 2 year deal with no fees, a 5 year 2.39% deal with no fees, or hold out?
The difference between the 2 year and 5 year deal is £420 per year in interest.
Robert
My fixed term mortgage is coming to an end in 3 months, so I can start looking for a deal now.
I'm currently with Yorkshire Bank, and the new deals they have to offer are middle of the road at 1.89% with no fees whatsoever being an existing customer. Now if we move to a new lender I can get a rate of ~1.1% which would mean a 2 year saving of apx £960, but I would need to pay arrangement and valution fees which could match the savings thus be non-economical moving lenders.
So my questions to you are, do you think the interest rates will shift during the next few months as I have a suspicion they will reduce by a 0.1-0.25 fraction meaning a possible saving of £500 over the term....
Do I sign the deal 1.89% 2 year deal with no fees, a 5 year 2.39% deal with no fees, or hold out?
The difference between the 2 year and 5 year deal is £420 per year in interest.
Robert
26 July 2017, 07:44 PM
#2
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In similar scenarios I have moved and not moved lenders depending on the hassle and fees (and who is responsible for them) vs saved interest, and between variable and fixed depending on my view.
Now I'm on 3.74% variable but with offset to zero. When it reset to 3.99% from 2.59% it wasn't worth the fees.
Would always think 5 years ahead vs short term savings. Can you get a long term low rate fix?
Now I'm on 3.74% variable but with offset to zero. When it reset to 3.99% from 2.59% it wasn't worth the fees.
Would always think 5 years ahead vs short term savings. Can you get a long term low rate fix?
26 July 2017, 09:53 PM
#5
Cheers guys.
One thing I forgot to mention is I am concolidating some debt that I've acquired for home renervation.
The house I bought 2 years ago was £180k, I put £35k as down payment thus mortgaged for £145k.
I used £10k savings to get cracking on renervation which quickly dried up even with me doing the work myself bar the kitchen and Windows/doors. So I borrowed £20k on a loan and have almost finished the house to a high standard.
Outstanding mortgage £128k
Debt to shift/consolidate £20k
Total mortgage applied for £148k, current house value I'm informed is a minimum £230k there LTV is less than 65%.
The issue I have is apparantly consolidating debt NOW is difficult if the loan is low rate and any credit cards are zero apr, and/or you don't show sign of being in financial difficulty!
However my lender Yorkshire Bank who is actually my current bank know all my finances so borrowing this extra cash against the house shouldn't be an issue.
I need to investigate other lenders, thanks for the heads up!
One thing I forgot to mention is I am concolidating some debt that I've acquired for home renervation.
The house I bought 2 years ago was £180k, I put £35k as down payment thus mortgaged for £145k.
I used £10k savings to get cracking on renervation which quickly dried up even with me doing the work myself bar the kitchen and Windows/doors. So I borrowed £20k on a loan and have almost finished the house to a high standard.
Outstanding mortgage £128k
Debt to shift/consolidate £20k
Total mortgage applied for £148k, current house value I'm informed is a minimum £230k there LTV is less than 65%.
The issue I have is apparantly consolidating debt NOW is difficult if the loan is low rate and any credit cards are zero apr, and/or you don't show sign of being in financial difficulty!
However my lender Yorkshire Bank who is actually my current bank know all my finances so borrowing this extra cash against the house shouldn't be an issue.
I need to investigate other lenders, thanks for the heads up!
27 July 2017, 08:21 AM
#6
I think you can get a pretty good idea of what lenders think the interest rate will be doing over the next few years based on the rates they offer.
Using kwiks rate as an example... I'd say they don't think there is going to be more than a 0.5% shift in either direction and probably more likely to go down than up.
What you do with that information is up to you, but I'd suggest you do a little reading on the subject before making a final decision, my choice to go with a fixed term base rate + 1% 10yrs ago over something like 5.8% has saved me an absolute fortune, but I did watch the markets for about a year and consult my financial adviser... who later said I could come and work for her.
At the end of the day it's always a bit of a gamble, but you can reduce the risk by doing lots of reading and listening to Radio 4
Using kwiks rate as an example... I'd say they don't think there is going to be more than a 0.5% shift in either direction and probably more likely to go down than up.
What you do with that information is up to you, but I'd suggest you do a little reading on the subject before making a final decision, my choice to go with a fixed term base rate + 1% 10yrs ago over something like 5.8% has saved me an absolute fortune, but I did watch the markets for about a year and consult my financial adviser... who later said I could come and work for her.
At the end of the day it's always a bit of a gamble, but you can reduce the risk by doing lots of reading and listening to Radio 4
27 July 2017, 10:02 AM
#7
I think you can get a pretty good idea of what lenders think the interest rate will be doing over the next few years based on the rates they offer.
Using kwiks rate as an example... I'd say they don't think there is going to be more than a 0.5% shift in either direction and probably more likely to go down than up.
What you do with that information is up to you, but I'd suggest you do a little reading on the subject before making a final decision, my choice to go with a fixed term base rate + 1% 10yrs ago over something like 5.8% has saved me an absolute fortune, but I did watch the markets for about a year and consult my financial adviser... who later said I could come and work for her.
At the end of the day it's always a bit of a gamble, but you can reduce the risk by doing lots of reading and listening to Radio 4
Using kwiks rate as an example... I'd say they don't think there is going to be more than a 0.5% shift in either direction and probably more likely to go down than up.
What you do with that information is up to you, but I'd suggest you do a little reading on the subject before making a final decision, my choice to go with a fixed term base rate + 1% 10yrs ago over something like 5.8% has saved me an absolute fortune, but I did watch the markets for about a year and consult my financial adviser... who later said I could come and work for her.
At the end of the day it's always a bit of a gamble, but you can reduce the risk by doing lots of reading and listening to Radio 4
Cheers bud.
Not sure I would be awake after 20 minutes of listening to Radio 4
I have been watching the economy passively for the last few years and it seems very volatile, but then its not every year we have a brexit and general election, and a Mr Trump propaganda!
The more I think about the deal's I have been offered by the current lender, and the offers elsewhere, it seems logical to go for a no fee 2 year deal and then at least in 2 years if the rates do continue to slide slightly I can take advantage at a later date. I cant see rates tipping 2.5% in two years personally, so lets see
Remember the buzz word here is No-Fee whereas if I move I will be looking at around a £1000 in setup and valuation fees, circa £42 pm over two years for the sake of comparing apples for apples.
1.79% £661pm no fees
1.19% £620pm plus fees (£42pm), therefore £662pm
Robert.
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27 July 2017, 10:44 AM
#8
We have a LTV of 65%
Just moved to a flexible repayment mortgage with Santander. 1.19% Tracker
Works well as likely to make one off payments periodically which reduces the amount I need to make. So I can either boost bank account t for hols etc or overpay and chip away at the capital.
Just moved to a flexible repayment mortgage with Santander. 1.19% Tracker
Works well as likely to make one off payments periodically which reduces the amount I need to make. So I can either boost bank account t for hols etc or overpay and chip away at the capital.
27 July 2017, 04:01 PM
#9
Don't take any notice of 'this might happen, that might happen'. This time last year we got advice and quotes and decided to wait a year seen as we were being told the market was set to crash (if only a little).
Our house gained £20k value in that year! (Right to buy).
We've gambled that in 2 years things will be relatively similar.
Our house gained £20k value in that year! (Right to buy).
We've gambled that in 2 years things will be relatively similar.