# Variable and fixed rate - Already got a mortgage advice please



## Guitarjon (Jul 13, 2012)

Just spoken to my financial guy who's always been spot on in the past an openly said if something isn't going to benefit us. 

Sometime around September we mentioned we were now on variable rate and were happy a it was so low but at the time it could have gone up so we asked him to look into a fixed rate. At the time he couldn't get anything any better (something to do with LTV rate or something) It was going to be fixed at almost 6% or something. 

Currently paying 3.99%

He has found two deals with the same company (halifax) so we don't have to re-mortgage or face any fees. 

The first being fixed rate for 2 years at just 2.54% He said this is strange as fixed rate are usually higher than base rate. 

The other being a 4 year fixed rate at 3.59% 

Either way we will be continuing to over pay as we currently do. We don't overpay by too much so will still be within the limit we are allowed. 

I asked him what he would do and he said they are both cracking deals and we all know the base rate is very low at the moment. He said that the variable rates banks can charge what they want so could start to go up. We were in the same position in September but nothing changed. However, we cant lose here as both are cheaper than the current and will be certain for 2 or 4 years. Having told him we were having a baby in July he said he'd go for the certainty of the 4 years. 

I know the general public don't know when things are going to up or down. My Dad said they probably won't be doing anything for another year (apparently it was in the news recently). Just wondering if any of you can advice. The 2 year is very appealing but in two years the deals could be significantly more expensive than the 4 year interest rate. 

What do you think? Think we are edging towards the 4 years. It will only save us a few quid/pay off the mortgage a little sooner but at least we know where we are for a few more years.


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## empsburna (Apr 5, 2006)

Guitarjon said:


> ....but at least we know where we are for a few more years.


If that is important to you then pull the trigger on the longer deal and prepare yourself if rates rise towards the end of your fixed term.


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## davies20 (Feb 22, 2009)

There only going to go up in my opinion. I'd fix now then like you say you know where your at. I'm currently 1 year in to a 4 year fixed @ 2.99%.


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## MDC250 (Jan 4, 2014)

I read rates are likely to be low for a while yet (12 months?), but what do I know I fixed at 4.99% for 5 yrs ending last September 

Is there a product and or reservation fee on either? Might seem attractive on the 2 yr deal but look at overall cost.


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## Guitarjon (Jul 13, 2012)

According to the guy there would be nothing extra to pay. I think there are fee's if you decide to cancel the fixed rate though. I am going to go and see him tomorrow as I need to do some other things (I actually know him- not directly but he has a couple of things I need to pick up). 

My concern is that if it goes up and continues to go up we could possibly get it fixed again at the end of 2 years. It's more likely to be more after 4 if it continues to go up and all the good deals would be gone? 

Also the rate for the 2 years is very appealing. I guess it's all how much of a gamble you want to take. Unfortunatly, financial matters/economics are not something I know much about.


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## Paul08 (Jun 1, 2014)

I fixed for 5 years in August last year at 3.39% with the post office on a no fee deal, leaving Halifax who I was with for the previous 2 year term. No one really knows where the interest rates will go. For me though its a win win situation to fix for a longer term. It gives me the certainty and if rates don't increase over the 5 year term I may have paid a few grand more than if I fixed for shorter terms but at least I can fix again at a low rate


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## MDC250 (Jan 4, 2014)

Call me a conspiracy theorist but say you fix for 2 yrs and rates do rise. You come out after 2 yrs...

House prices gone up or down at this point? Who knows to be fair. If down and you don't have enough equity to have an attractive LTV or say affordability criteria are tightened again you might get stuck with SVR of existing lender or end up paying higher rate of interest due to LTV.

Seems to me reason lots of good deals and competition at the moment is nobody is rushing to fix with SVRs being relatively low. In 2/3 yrs banks may not be so keen to offer deals and you take that chance.

Have zero to back any of my crazy thoughts up,just seems to me the banks won't take a hit like they've done without clawing it all back at some point. People stuck on mortgages in a few years seems a good way to do that.

Right back to hunt UFOs


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## Guitarjon (Jul 13, 2012)

MDC250 said:


> Call me a conspiracy theorist but say you fix for 2 yrs and rates do rise. You come out after 2 yrs...
> 
> House prices gone up or down at this point? Who knows to be fair. If down and you don't have enough equity to have an attractive LTV or say affordability criteria are tightened again you might get stuck with SVR of existing lender or end up paying higher rate of interest due to LTV.
> 
> ...


I think you have mentioned some good points which is why I'm in two minds about it. Pros and cons for both!


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## MDC250 (Jan 4, 2014)

Guitarjon said:


> I think you have mentioned some good points which is why I'm in two minds about it. Pros and cons for both!


Banks are like casinos...house always seems to win!


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## Guitarjon (Jul 13, 2012)

We've gone with the 4 year. We will just have to see what happens in 4 years time when the fixed rate runs out. It doesn't sound like they will be putting the base rate up for a couple of years but it may be likely they will change it then. 

The figures were slightly wrong. We will still be paying less at the new fixed rate than we currently are but it's marginally better than we expected from his rough calculations over the phone. We currently pay around 391 a month. We actually pay more from over payments but thats what we have to pay. We now only pay 352 and will be for the next 4 years. Hopefully even the small amount of extra over payment will reduce our mortgage lengths. 

I'd like to pay a little more but I'll wait and see what this baby stuff costs first.


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## MDC250 (Jan 4, 2014)

^ baby stuff costs lots and never stops 

Overpaying your mortgage is the way fwds if you can, I'm not even paying down the capital on ours


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## m4rkymark (Aug 17, 2014)

We have two parts to our mortgage, the first part is from my original house I bought years ago, we left it on the banks std base rate, we are paying 2.4% - it's so old it's not worth moving because we would loose the original ts&cs we were given when it was taken out. The other part was taken out when we moved house 6yrs ago. That's on a 5yr variable rate at 2.5%. I don't se rates moving for a long time yet, although our economy seems to be lifting a little the eu and the states are still in the ****, eu is printing money like its going out of fashion just now to keep them afloat. 

The govt. cannot afford for interest rates to go up at the moment - they have borrowed too much as it is and can't afford for the rate to start rising because they don't have any more cash to start paying for higher payments. All this talk from BoE about rates rising for at least the last year is just talk, trying to put a positive spin on things. Until the deficit comes down interest rates are going nowhere.


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## m4rkymark (Aug 17, 2014)

so as the hole deepens and gets bigger mortgage rates keep coming down... most banks/BS are now offering rates in the 1.xx% range with HSBC offering 1.19% fixed for more than 2yrs. deflation is now on the cards - good for people who want to borrow money but is it a good state for the economy to be in?


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## Guitarjon (Jul 13, 2012)

We fixed ours. It may be on the down but hey ho, still cheaper than we were paying.


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## Andyg_TSi (Sep 6, 2013)

I currently on my lenders standard variable rate, which is 2.5%.

I've been looking at deals available & while, yes I can get a 2 year deal with fixed rates at 1.XX%, the standard variable rates if these deals once the 2 years are up are in the region of 3.89% - 4.49%.

So while the initial rate is attractive, the SVR is higher.

Id rather stick on 2.5% and pay a lump sum off the capital borrowed.

If you have savings then pay your mortgage down. by current rule of thumb, you pay £5 per month for each £1K you owe on your mortgage.
So if you had 'say' £10k paying that off your mortgage would save you 10 x 5 (£50) per month.

Savings rates are ****e so if you can, pay down debt (mortgage) instead of remortgaging.


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