Right, its time to negotiate a new mortgage deal…

…I’ve come to the end of my fixed period, which is currently at 3.6%.

What to do, FIL says fix as long as possible (circa 3.8% for five years), take a life time tracker (as low as 2.2% currently, so 1.7% over base), or a fix period tracker of about £1.7% for 3 years?

It seems that within the Trackers out mortgage might only just reach the current rates after three years, but with the lifetime tracker, we could be there in 2015/16, at which point a 3.8% fixed will be out of the question.

??

I gambled on a base rate tracker 7 yrs ago when interest rates were 5% ish.

It paid off big time.

This may not help your decision but I’m not fixing anytime soon.

Its not going to go down though is it?

I could take a risk on a 2 year tracker i guess…

Assume that when rates do go up (spring/summer next year according to news this week) they’ll go up significantly for the next few years. I’ve just got a 5 year fixed with nationwide-no fee at 3.2% fixed for 5 years. I’ve also managed to delay the start till feb next year so hopefully negating any potential rises in rate hikes as the banks will be taking advantage of the ‘late’ fixers. Tracker IMO is not the way to go at the minute.

It’s a tough call. We fixed five years ago when mortgage rates were so low they were unlikely to go lower. They then dropped to almost zero. Just got a new deal at the start of the year and fixed again. Toyed with a tracker and could’ve got 1.5% above (so 2%) but fixed at 2.95. I didn’t think the difference was enough with all the talk of rates going up next year. Maybe this time Its the right gamble, maybe I never learn. I put the numbers through a spreadsheet at the actual sums involved didn’t change that much anyway.

I think it depends on the size of the mortgage and your financial situation.

Personally I’d now fix for a long time. Whilst you might lose now, I think you’ll recover it. It’s a gamble but a calculated one.

The exception is whether you have loads of spare cash and a short mortgage. If you do go for the tracker and spunk as much in as you can.

We got a .15% above base rate tracker for life just before the financial crash. Only problem is since then two kids have arrived and taken all the spare cash!

I’m on a tracker ATM, 1.8% over base. Not planning to go fixed just yet, reckon base rate is staying put for a little longer.

Newcastle Building Society are looking for new customers as of today – see my thread above 8)

Take anything you can get,in the same situation have been turned down buy three different lenders.
Had the mortgage for 15 years never missed a payment owe a lot less than half the value of house but because of the new lending -earning regulations have refused because we don’t earn enough i am bulling my bloody hair out.

we were on a fixed offset account,

worked out really well for us as ive been made redundant twice in the last 3 years, put the redundancies into the offset+ savings,meant we were overpaying b4 i lost my job, reduced our payments and given us a nice buffer till i found work again , ultimately the savings have gone towards a deposit on a new house on a better offset deal.

got way more out of our savnigs than we wouldve considering how low interest rates are

I can’t see interest rates going up a lot, our biggest trading partner, the EU, is in the doldrums for a long time yet….

With a tracker how soon do they put your mortgage payment up/down once the base rate changes?

I am pretty new to the game. I like to know my outgoings are fixed, so quite tempted by some of the long term fix rates available at the moment.

I’m glad we don’t have a mortgage any more, as I would feel serious pi55ed off paying so much over base.

Over the lifetime of my mortgages I never paid more than 1% over base – just had a (standard) variable for the first 20 years, and then moved to a new-fangled tracker when we were offered a base-rate tracker.

And never paid a fee either.

Financial Services are a bunch of shysters!

I’ve just fixed with nationwide for 3.29% for 3 years.

Can see the rates going up next year quite a bit.

I’m glad we don’t have a mortgage any more, as I would feel serious pi55ed off paying so much over base.

Over the lifetime of my mortgages I never paid more than 1% over baseBut base is so low. I think I’m happier paying a few percent over base now than 15% or more in the 80s. Although I would be happier if it was paid off.

Financial Services are a bunch of shysters

Hard to argue with that

The rates won’t shoot up over the next couple of years, they’ll creep up. Even a 1% rise would create serious issues in an economy used to a very low base, making significant difference to monthly mortgage payments and possibly reversing the UKs trend toward growth. Queue another recession.

I feel it’ll creep up at 0.5% per year, perhaps 1/4 per half year to “ease” us into paying more for our mortgages and minimising mortgage defaults, which would lead to all the other issues, and a suppression of the housing market – which could be a good thing actually in the short term.

Hence my initial thoughts are to go with a two year Tracker/discount and overpay by keeping our pay,nets the same, then fix in 2016. A bit more googling though finds as low as 3.24 until 2020, which is attractive. Our current building society letter quotes “unbeatable offers” if we stay with them, but then of course they would. A phone call Monday will see what these are, but I shall be quoting what I’ve found to them.

The rates won’t shoot up over the next couple of years, they’ll creep up

You can’t really know that, recent history has shown us that major shifts in base rate can occur very quickly indeed
In theory the gov doesn’t set the base rate anymore but the BOE plays their tune.
Take Black Wednesday, the day started with interest rates at 10%, by mid morning they pushed them up to 12% & by mid afternoon 15%
The Tory government of the day really couldn’t care less how much pain it was dishing out to house buyers, they just did it.

You can take a good guess at how fast you think the rates will move, but don’t rely on it

But base is so low. I think I’m happier paying a few percent over base now than 15% or more in the 80s.

And that’s what the FS Industry would like you to think, but when we had double-digit base rates we also had equivalent inflation (and savings) plus house-prices were better adjusted to what we could afford to pay.

Do you really think the current environment would stand that situation? The whole world economy is very fragile that I doubt a 1st worl nation would act in that way.

Theres no right answer for this, only whats right for you and your circumstances.

For what its worth I’ve been on various forms of variable since I bought my first house (never fixed rate), and I’m significantly better off as a result, probably to the tune of something like ~£60k-70k over the last 16 years.

Basically if you dont like taking risks and can afford whatever the fixed rate is, then take the fixed rate. if you like taking a risk and can potentially afford an increased rate then go for a tracker.

Interest rates are not going to go down thats a near certainty, the question is when will they go up and by how much, My gut feel is that they will go up only very slowly when they do go up, but not at all next year .

You can put the various scenarios into a spreadsheet and work out at what point you’ll be better off on a tracker vs fixed and see if you think that scenario is likely to happen, then take a punt (and it is a punt).

I’m interested in STW wondering if this is good. We are finishing a 3 year at 3.49%.

So my current BS e.g. with no paperwork etc will offer 2.79% fixed to 1st April 2018, but becuase I want to keep my monthly payments the same, will reduce the term from the 22 years I’m at, to 18 years.

Thats a lot of saving in the long term – approx £36k. I can make overpayments, I can move house with the product.

There are quite a few lower rates on Money supermarket because our LTV is 58%, should I go through the re-mortgage hassle or stick with the current BS?

Fixed rates give false comfort, and charge a hefty fee for it both up front an in terms of the interest rate you pay. We know that base rates won’t move much for another year give or take, so in that period you WILL be better off with a tracker. In the medium term rates MAY increase, but not so much as to obviously favour one tactic or t’other, and probably not enough to offset the advantage you’ve had in year 1. So take the certainty of a low rate while you can get it, and overpay your repayments while you can.

Longer term, rates will inevitably return to the historical average, but that is probably something to think about for your next mortgage deal as it’ll be a few years yet.

Me, I’ve always had trackers and always will.

We know that base rates won’t move much for another year give or take,

Do we?

For reference I got offered (last August) 3.49 fixed for 3 years with a 90% LTV rate. So I’d not say you aren’t being offered the best deal. I also got this with the same provider so no fee and no additional costs.

Personally trackers at the time on offer meant a 1% increase in rates would make fixed a better deal, so went fixed (it was far better than the old deal anyway) so am using the difference between old and new payments to overpay also.

Looking forward to having more options after reducing my LTV by the next time I come to the end of the fixed term.

3yr Tracker Nationwide – no fees,no erc, free basic legals, overpaying etc. 1.39% above base.

Had to to take out their current account – no big deal.

Had a good 50% LTV though.

We know that base rates won’t move much for another year give or take,

Do we?[/quote]

Yes we do, in the full context of what I said above – we can be pretty certain that for the next year or so you’d pay less on a tracker than a fix

I’m due to remortgage too, and planning on paying a decent lump sum in too, which will take me down to less than 50%LTV. Hoping to be mortgage free before 50 (11 years to go!).

Anyone know if a recent job change will affect things? I’d been with the same company for 16 years, but left and started 5 weeks ago with a new lot. I know it goes against you when you first buy a house if you haven’t been employed for 6 months or whatever, is the same question asked when re-mortgaging?

Those setting the fixed rates build in their expectations of where rates will go over the time of the loan. So they expect to make money out of the fixed rate deal – those taking out a fixed rate deal should see it as paying for insurance so that if something unexpectedly nasty does happen you’re covered.

I’ve never taken out a fixed rate since my 1st house in 1996 and have come out on top.

Arse, I thought it was good and I’d be avoiding all the fees and paperwork, solicitors etc etc.

Those setting the fixed rates build in their expectations of where rates will go over the time of the loan. So they expect to make money out of the fixed rate deal – those taking out a fixed rate deal should see it as paying for insurance so that if something unexpectedly nasty does happen you’re covered.

That’s a good way of looking at it.

its time to negotiate a new mortgage deal

Not sure there’s any negotiating involved.
you ask for a mortgage and they tell you how much it’s going to cost you.
‘Negotiations’ over.

I’d fix for 5 years iiwy. As long you’re happy with the payments who cares if rates will go up or down, why take the chance, fix for 5 years and forget about it.

Using MoneySupermarket…

Based on my circumstances there is only 11 Trackers out there below the rate I’m being offered. Of those, only 4 are 0.5% or more below the fixed I’ve been offered. This differential is 2 at 0.9% less, 1 at 0.75% less and one at 0.5% less.

So, taking that into account if I was able to secure one of the two cheapeast over 3 years, I’d hope that there wasn’t more than a 0.9% increase during that time, or at least partway through that period so that over the 3 years whatever time over 2.79% is not more than the time I spent under it, then I’d have equalised/saved over 3 years. If there was a 1% increase by the end of 2015, I’d lose out.

Its very possible base rate will be 1% higher in 3 years you know, but before December 2015 is unlikely perhaps, but by April 2016 likely in my view, making it a very close call in terms of the decision.

Unless I’ve missed something, and based on that:

I’d fix for 5 years iiwy. As long you’re happy with the payments who cares if rates will go up or down, why take the chance, fix for 5 years and forget about it.

Yup. I’m fixing for three though becuase I anticipate a change of circumstances in three years or so possibly, which means I’d like to be in a position to play around a bit.

We’re are looking at the mo. Want to borrow around 30% of the value of our house but change the repayments as I am now self employed and we want to be able to easily repay on just my wife’s income.

Seems very hard to get a good deal – despite wanting to only borrow 1x wife’s income, no debt and good credit history. I only have one year of certified accounts which seems a massive problem in principle – once they realise one of you is self employed even when you are not asking for that income to be taken into account….

Talk to a contractor mortgage specialist maybe? I was with Woolwich/Barclays before I contracted, they wouldn’t talk to me when I wanted to move house so I got a contractor mortgage person to sort out for me – still with the Woolwich/Barclays.

BTW, my fab mortgage calculator:

https://docs.google.com/spreadsheet/ccc?key=0Al-Bq4gR-Hn7dHdROXVlaFJtYnFQSlVoZzI2c085R0E&usp=sharing

A ha.

And again – using Moneysupermarket, the fees of the cheapest mortgages I can find to fit my flexibity requirements negate the no-fee 2.79% over 3 years for my current provider.

Job done then.

Best I’ve seen is Nationwide, offering 2.49% fixed for 4yrs, or BR + 1.29 for 3yrs. Both zero fee.

Thanks Mudshark! I had started down that avenue – but it had been a frustrating couple of days leading up to that…

Mike p where are you seeing those, and who’s BR?

BR….base rate. I would have thought.

In terms of ‘negotiating’ a new mortgage deal, is it possible to actually negotiate or do you just look around and choose the best deal for you?
I ask as I’ve never managed to ‘negotiate’ a better deal; I just go to the lender and see what offers they have and say, yeah that one will do. Didn’t realise you can get them to improve their terms? Presumably you have to play them off against each other like you would do with car dealers?