In a few months time we will have a year left on our existing 5 year fixed rate mortgage. The question is do we opt for a 3 year fixed rate which gives us a monthly payment of £452 or a 5 year which gives us £472 a month. There is also a two year deal of £428 a month but we have to pay a £999 fee for this. We are seeing another mortgage advisor tomorrow but have limited options as we bought through a shared ownership scheme, Homestake, and not many mortgage providers want to take us on. Having had a 5 year fixed rate initially I am reluctant to go for another but this is probably clouded by the fact that interest rates have gone down and down since we got our mortgage. Another consideration is that we have a fee of about £350 to pay to the people that we share ownership with, every time we change our mortgage. So what do you predict is going to happen to interest rates and mortgage avaliability in the next few years?

No idea, but I’d love a mortgage payment that low…

what does your variable go to?

When my last fixed ended I went to 1.2 above base rate. Hence I really don’t want rates to go up until I find a job!

DO you mean that you don’t need to make a decision for another 12 months?

If your mortgage reverts to variable rate when it terminates then hits worth giving that some consideration. You might find the difference between your banks variable rate and your current fixed is significant.

Sure rates will go up eventually but I’m banking on them creeping up slowly so it’ll take months or years to go from my current rate back up to my previous fixed level from 18 months ago.

Didn’t the BoE say they thought interest rates would stay low for some time yet only the other day?

In afew months we will have a year left to go with our current fixed rate. We are considering buying out our last year to get onto a better rate now, thinking that rates will go up in the next year. It’s my understanding that although the BoE hasn’t put up interest rates yet the banks have, so the difference between the BOE base rate and the lowest interest rates being offered by the lenders is increasing. May have got that wrong though.

You really need advice from someone like me! We’re on 5.68% fixed for 5 years 🙁 But with only a couple of years ’till the house is paid off, the £2500 to get out of the fixed rate and buy into a new one was simply not worth it. The interest rate on a Repayment Mortgage doesn’t really change your monthly bill that much; expensive fees, however do.

I’ve never had a fixed rate mortgage and doubt I ever would but if I was going to fix, so as to reduce risk which is fair enough, I would think I may as well make it for at least 5 years given rates will be rising – the monthly amounts aren’t much different really. I’m currently on 0.98% so can cope with quite an increase before a fixed would have worked out better.