[peterg1965]

Good evening all......

I aim to have paid off my rather large mortgage in 7 years time when I am 55. Currently on a BoE Tracker 1.03% above base rate, but it has a floor at 2%, so am paying 3.03% and this is a Nationwide Lifetime tracker taken out in 2008.

I have the option to 'switch and fix' with Nationwide at minimal cost to me, no valuation required, no paperwork, quick and simple and done online. The 5 year fixed rate I have my eye on is 2.89% 5 year fix with a £900 product fee. This will save me £61 a month - my mortgage is interest only.

My only hesitation is, what if we move and downsize in the fix period and how much I will be exposed to the ongoing SVR for two years from when the fix finishes to when I am in a position to pay down the mortgage.

So, should I fix or stay on my tracker? With the tracker BoE base rate would have to go up more than 1.5% before it has any impact on my mortgage payment.

An alternative is to fix for 2 years at 1.89% for two years (saves me £300/month in interest ), the gamble is whether the Base rate remains low until autumn 2015, then I can fix again at a competitively low rates.... ( and no, the £300 would not be spent on a 2 year ridiculously cheap lease deal.... )

Thoughts ??

[Nick the Greek]

This is the $64,000 question Peter. May be worth getting some professional advice via a mortgage broker, some of the deals they have are only available to the intermediated market.

I have a Nationwide mortgage with the 2% collar, but I only pay 0.5 % plus base, so paying 2.5%. As my mortgage is paid off in a couple of years, not looking to change it.

As to where interest rates are going, I think most agree the answer is up, the question is when. The BoE forward guidance uses unemployment as a measure of when interest rates will increase but I think the initial talk of 2016, is now more like 2015. One would wonder of course whether interest rates would increase before or after the election.

[peterg1965]

I am most definately not looking to change mortgage provider, very happy with Nationwide and I have lost money before trying to shift providers and having my house valued on the ultra conservative side ( ie. undervalued) which put my LTV figure up.

I can't believe we will return to 5-6% base rate anytime in the next decade! The recovery is fragile enough as it is, wages are not rising and rising mortgage rates are not politically attractive right now.... I might just get away with a two year fix and then fix again in 2015 before base rate lift off.....

[Nick the Greek]

I might just get away with a two year fix and then fix again in 2015 before base rate lift off.....

I guess the challenge to this is by that time the fixes will have all gone up. It's a punt that you take at the end of the day.

[N9dyxuk]

Originally Posted by peterg1965

Good evening all......

I aim to have paid off my rather large mortgage in 7 years time when I am 55. Currently on a BoE Tracker 1.03% above base rate, but it has a floor at 2%, so am paying 3.03% and this is a Nationwide Lifetime tracker taken out in 2008.

I have the option to 'switch and fix' with Nationwide at minimal cost to me, no valuation required, no paperwork, quick and simple and done online. The 5 year fixed rate I have my eye on is 2.89% 5 year fix with a 900 product fee. This will save me 61 a month - my mortgage is interest only.

My only hesitation is, what if we move and downsize in the fix period and how much I will be exposed to the ongoing SVR for two years from when the fix finishes to when I am in a position to pay down the mortgage.

So, should I fix or stay on my tracker? With the tracker BoE base rate would have to go up more than 1.5% before it has any impact on my mortgage payment.

An alternative is to fix for 2 years at 1.89% for two years (saves me 300/month in interest ), the gamble is whether the Base rate remains low until autumn 2015, then I can fix again at a competitively low rates.... ( and no, the 300 would not be spent on a 2 year ridiculously cheap lease deal.... )

Thoughts ??

I work for a bank mate and alot of banks are now getting away from interest only mortgages, they are not offered to new customers and banks will try do all they can to get customers to switch to repayment so in future you are at risk of bieng offered higher rates compared to those on capital and interest mortgages, also you didnt mention if you were to fix it and then downsize if there would be an early repayment charge you would incur, potentially 5% or 6% of your mortgage balance at the time, if you are planning to downsize in e.g 2 years time then best to book lowest interest rate available for 2 years and once it expires and you go on to the banks SVR then clear off the balance without any charges. But if your not sure if you are going to move out then the lifetime tracker sounds good, the BOE review the base rate the first thursday of every month and historically moves up or down by 0.5% but even with that increase banks will usually bump up there rates before hand by atleast a 1%, its a gambling game mate and essentially down to you if you want stability for next 5 years with the potential risk of charge if you move (depending on banks policy). But with the money you are saving each month you can save up and use to pay chunks off the mortgage and reduce your term and keep mortgage monthly's the same.

[dar2008]

Originally Posted by peterg1965

Good evening all......

so am paying 3.03% ... I have my eye on is 2.89% ... This will save me £61 a month - my mortgage is interest only.

Thoughts ??

Wow, so 500k(?), my (what I thought) was very large mortgage, suddenly doesn't feel so big anymore!

[peterg1965]

Originally Posted by dar2008

Wow, so 500k(?), my (what I thought) was very large mortgage, suddenly doesn't feel so big anymore!

Definitely not £500K, not sure how you worked that out, but you are over £200K out! There is a small part of the mortgage which in on the SVR @ 3.99%.

[av_guy]

I know you suggested that you do not want to change provider... look at HSBC: no charges or standard valuation fees, no standard legal fees or other. There is a £99 booking fee which is nominal (which they have waived). I have just secured a rate of 1.49% - Lifetime Tracker Capital Repayment product above BoE base rate i.e. 1.99% overall as part of a remortgage (only rate change). No early payment charges, fees, etc.

I know I can use the money to invest elsewhere and earn more than that, so why pay off the mortgage?!

This is not financial advice but I would encourage you to look around as I did (ended up with HSBC anyway). The market has opened up a lot more, particularly if you have a large deposit/more than 60% equity.

Best of luck.

[dar2008]

Originally Posted by peterg1965

Definitely not £500K, not sure how you worked that out,...

Glad to hear it!

I worked it out based on your predicted saving of £61 a month...

You mentioned moving from your 3.03% to a 5year fix rate of 2.89% would save you £61 a month.

A £500k interest only mortgage would cost approx. £1262 a month at 3.03% and approx. £1204 a month at 2.89%, hence my assumption of your large mortgage.

Good luck in making the right decision, it's a tough call.

[peterg1965]

Originally Posted by av_guy

I know you suggested that you do not want to change provider... look at HSBC: no charges or standard valuation fees, no standard legal fees or other. There is a £99 booking fee which is nominal (which they have waived). I have just secured a rate of 1.49% - Lifetime Tracker Capital Repayment product above BoE base rate i.e. 1.99% overall as part of a remortgage (only rate change). No early payment charges, fees, etc.

I know I can use the money to invest elsewhere and earn more than that, so why pay off the mortgage?!

This is not financial advice but I would encourage you to look around as I did (ended up with HSBC anyway). The market has opened up a lot more, particularly if you have a large deposit/more than 60% equity.

Best of luck.

Understand, but I have a smudge under 70% Loan To Value using Nationwide's own valuation - based on area/what I paid for the house and when I bought it. I fear that if I go to another provider they could value at well under this figure, my LTV shoots up and then I do not get the pick of the best deals and potentially it has cost me time, effort and money for no gain.

EDIT…I did a search and comparison, Nationwide offerings are very competitive at my LTV, I can find nothing that beats it. Interest Only narrows the options considerably.

Originally Posted by dar2008

Glad to hear it!

I worked it out based on your predicted saving of £61 a month...

You mentioned moving from your 3.03% to a 5year fix rate of 2.89% would save you £61 a month.

A £500k interest only mortgage would cost approx. £1262 a month at 3.03% and approx. £1204 a month at 2.89%, hence my assumption of your large mortgage.

Good luck in making the right decision, it's a tough call.

It is a tough call and another conversation with Mrs today has probably changed our assumptions about when we will move house. Looking like we will spend a little money on our current place and stay for longer (4/5 years or so). Although that then screams 5 year fix (c£60/month saving), the lure of a 2 year and £300/month saving is still very attractive, and I can do a lot with that extra £300!

[peterg1965]

Job done, I went for the 5 year fix at 2.89%. Lots of head scratching over this, but I think I am doing the right thing. Instant saving of £60 month and the knowledge that my payments will stay the same until Dec 2018 when I hope to be in a position to pay a considerable chunk of it off. It's portable and I can pay 10% per year with no additional charges if I so desire. It took 20 minutes to complete the process on the Nationwide website and I get £100 cash back in a couple of weeks.

[av_guy]

> £700 saving per year, so that equates to ~£3,500 over the period thereby increasing your equity and reducing the amount of interest on capital borrowed on a compounded basis.

I know the above is obvious, but still worth mentioning what a little research can do plus peace of mind guaranteeing that payments do not increase over that period.

Well done

[Nick the Greek]

Sound logic young Sir. Well done.

[Darkeeboy]

So, two year at 1.79 or five year at 2.99, if only crystal balls existed, hmmm...