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Kurt Barlow

Remortgaging - Fixed Rate Or Discount Variable?

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Remortgaging at the end of next month and not sure whether to go fixed rate or discount variable.

Remortgaging to the tune of £50K on a house worth IRO £200K

Have been spoilt the last 6 months with an interest rate of 0.5%!

Have previously gone for discount variable but am inclined towards a fixed rate given that base rates cant really fall any lower.

Also finding on a relatively small mortgage its often worth paying a higher APR to forgo the fee.

Suggestions welcome - sensible ones that is :rolleyes:

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For saying this, I'm going to have to wash my mouth out with a lavatory brush and dettol but I agree with Sibley :( as I have ended up in this position.

The best answer is spreadsheets to play with a few numbers fees, rates etc all playing a part.

You could always get a firm offer on a fix as a safety net and keep on the SVR (if its a good deal). I personally would not feel comfortable committing to a discount/tracker for a fixed period at the moment although i'm very lucky to be enjoying a SVR at base rate + 2%.

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Fix it at the lowest rate you can find. I can't help having the feeling that the Tracker mortgages are going to catch al lot of people out when rates shoot up. The Piper will be coming back for his payment.

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Tracker, no question.

At 50K, with the differential between fixed and trackers being so high, rates would have to go up massively before you benefit from a fixed rate over the term. A 5 year fixed is double the interest rate of a good tracker at the moment - not good value.

If you're anxious get one with no redemption penalty so you can move to a fixed quickly if rates look like they're about to soar.

Fixed rates are rubbish at the moment when there are good redemption free trackers around.

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Tracker, no question.

At 50K, with the differential between fixed and trackers being so high, rates would have to go up massively before you benefit from a fixed rate over the term. A 5 year fixed is double the interest rate of a good tracker at the moment - not good value.

If you're anxious get one with no redemption penalty so you can move to a fixed quickly if rates look like they're about to soar.

Fixed rates are rubbish at the moment when there are good redemption free trackers around.

i wonder why fixed rates are rubbish?

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Why dont you just stay as you are and not remortgage?

Rates wont be going up drastically for a long time.

Just enjoy the low rate.

I doubt you will get many replies on this thread as homeowners are hated on here.

You're known as what they call a sheeple. If you sold up now you would have £150,000 in your hand. Aren't you silly?

You would be much better renting with no dough and praying house prices crashed 90%. You could be one of the gang. :lol:

LOL - unfortunately gold or Gilts don't have the same utlity as a house with bedrooms, a kitchen, garden, and garage!

I have no intention of selling - just canvassing the forum for views on where they think IR are going in the next 2-4 years.

Its not life or death whether rates are 1,2 or 10% I just want to make a reasonably informed decision when my discount rate comes to an end.

I am inclined towards a discount offset mortgage as savings rates are so pitifully low.

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Guest happy?
LOL - unfortunately gold or Gilts don't have the same utlity as a house with bedrooms, a kitchen, garden, and garage!

I have no intention of selling - just canvassing the forum for views on where they think IR are going in the next 2-4 years.

Its not life or death whether rates are 1,2 or 10% I just want to make a reasonably informed decision when my discount rate comes to an end.

I am inclined towards a discount offset mortgage as savings rates are so pitifully low.

http://www.youtube.com/watch?v=cxlHiyBewSA

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Remortgaging at the end of next month and not sure whether to go fixed rate or discount variable.

Remortgaging to the tune of £50K on a house worth IRO £200K

Have been spoilt the last 6 months with an interest rate of 0.5%!

Have previously gone for discount variable but am inclined towards a fixed rate given that base rates cant really fall any lower.

Also finding on a relatively small mortgage its often worth paying a higher APR to forgo the fee.

Suggestions welcome - sensible ones that is :rolleyes:

Personally I would fix for as low and as long as possible... why? I would like to know what my costs would be for as long as possible into the future, and also this part of my finances would not require any attention for x years giving me time to worry about the productive side of the balance sheet. To me this would be worth the potential loss on the higher rate on the fixed.

Edited by Bubble&Squeak

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Fix it at the lowest rate you can find. I can't help having the feeling that the Tracker mortgages are going to catch al lot of people out when rates shoot up. The Piper will be coming back for his payment.

This is the big question mark in my mind?

Inflation, sterling plummeting IR's up to prop up the currency and control inflation

or

deflation and low IR's to stimulate demand, encourage exports.

What does the Oracle - Injin recommend?

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Personally I would fix for as low and as long as possible... why? I would like to know what my costs would be for as long as possible into the future, and also this part of my finances would not require any attention for x years giving me time to worry about the productive side of the balance sheet. To me this would be worth the potential loss on the higher rate on the fixed.

+1

long term fixed rates have been rising over the past year

and thats for a reason

anyone got a spare rocket pic?

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It will be cheaper to do nothing, the best deals have £999.00 arrangement fee. You may get free val and legals but will still cost you a grand to switch lenders. Check with your current lender to see what they wil offer.

The only deals avaliable with out tie in's are life time trackers.

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I think it depends on how quickly you can pay the capital down. If you think you would make a serious dent in the £50 over the next two years (I think IRs will remain fairly low in this period) then either stay on the product you are on or get a tracker with low arrangement fee. By the time interest rates do start to rocket (if they do at all) then the interest will be accruing on a much smaller amount so will not be that significant anyway. I dont see the point in fixing for less than 5 years, as rates will have to go up soon and quickly in order to make this the better option, and if you fix you are going to go a very high SVR anyway. If you want certainty then fix for 5 years or more and save like hell so that when you come off your fix you can pay down the capital, or fix at a lower rate of rates have come back down again.

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Remortgaging at the end of next month and not sure whether to go fixed rate or discount variable.

Remortgaging to the tune of £50K on a house worth IRO £200K

Have been spoilt the last 6 months with an interest rate of 0.5%!

Have previously gone for discount variable but am inclined towards a fixed rate given that base rates cant really fall any lower.

Also finding on a relatively small mortgage its often worth paying a higher APR to forgo the fee.

Suggestions welcome - sensible ones that is :rolleyes:

With a 50k mortgage, your arrangement fees are going to be 6 months mortgage.

It's possible we will have low BoE base rate for a while yet (Japan has). I wouldn't be in too much of a hurry to do anything.

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I think it depends on how quickly you can pay the capital down. If you think you would make a serious dent in the £50 over the next two years (I think IRs will remain fairly low in this period) then either stay on the product you are on or get a tracker with low arrangement fee. By the time interest rates do start to rocket (if they do at all) then the interest will be accruing on a much smaller amount so will not be that significant anyway. I dont see the point in fixing for less than 5 years, as rates will have to go up soon and quickly in order to make this the better option, and if you fix you are going to go a very high SVR anyway. If you want certainty then fix for 5 years or more and save like hell so that when you come off your fix you can pay down the capital, or fix at a lower rate of rates have come back down again.

I may well stay with the SVR which is 4.24/4.34% and forgo the aggro of changing. I can probably make extra payments to the tune of £5K a year.

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Why dont you just stay as you are and not remortgage?

Rates wont be going up drastically for a long time.

Just enjoy the low rate.

I doubt you will get many replies on this thread as homeowners are hated on here.

You're known as what they call a sheeple. If you sold up now you would have £150,000 in your hand. Aren't you silly?

You would be much better renting with no dough and praying house prices crashed 90%. You could be one of the gang. :lol:

You can now get a fixed rate 5 year bond with Yorkshire BS paying over 5%

This suggests that interest rates are likely to rise quite substantially in the next few years.

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LOL - unfortunately gold or Gilts don't have the same utlity as a house with bedrooms, a kitchen, garden, and garage!

I have no intention of selling - just canvassing the forum for views on where they think IR are going in the next 2-4 years.

Its not life or death whether rates are 1,2 or 10% I just want to make a reasonably informed decision when my discount rate comes to an end.

I am inclined towards a discount offset mortgage as savings rates are so pitifully low.

Is 5% pitifully low?

Personally I would fix if I were you

Rates can only go one way from here.

:rolleyes:

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I may well stay with the SVR which is 4.24/4.34% and forgo the aggro of changing. I can probably make extra payments to the tune of £5K a year.

After paying the arrangement fees etc, you are unlikely to be better off switching to another mortgage. A years interest is going to be just over £2k at that rate, which is only double the likely arrangement fee on a new mortgage. In two years time, assuming your £5k overpayments and capital repayments, the interest will only be accruing on say £35k, and the amounts start to become quite trivial at almost any likely interest rate assuming you are not about to retire onto a very low income.

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Is 5% pitifully low?

Personally I would fix if I were you

Rates can only go one way from here.

:rolleyes:

Base rates can only go up (save going to zero), but if he is able to save a grand or two on arrangement fees and a bit on a lower interest rate in the meantime, then by the time rates do go up, he will have a much lower balance outstanding than he otherwise would if he fixed now. Its unlikely, but not inconceivable, that fixed rates may come down again if hte interest rate outlook changes, so he would be able to take advantage of this if he just stayed on the SVR.

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Base rates can only go up (save going to zero), but if he is able to save a grand or two on arrangement fees and a bit on a lower interest rate in the meantime, then by the time rates do go up, he will have a much lower balance outstanding than he otherwise would if he fixed now. Its unlikely, but not inconceivable, that fixed rates may come down again if hte interest rate outlook changes, so he would be able to take advantage of this if he just stayed on the SVR.

A lot can happen in 5 years.

If interest rates are not going to go up, why is the rate being offered for fixed rate savings bonds going up?

I am not going to put any money in the Yorkshire BS 5 year bond fixed at 5%, because IMO rates on offer next year will be even higher.

At the end of the day people have to make up their own minds, but given that base rate is the lowest its been for 100's of years I think it's a no-brainer.

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A lot can happen in 5 years.

If interest rates are not going to go up, why is the rate being offered for fixed rate savings bonds going up?

I am not going to put any money in the Yorkshire BS 5 year bond fixed at 5%, because IMO rates on offer next year will be even higher.

At the end of the day people have to make up their own minds, but given that base rate is the lowest its been for 100's of years I think it's a no-brainer.

STOP TALKING CRAP

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No it doesn't

I bought my first house in the 80's when 95% plus of mortgages sold were endowments

I insisted on a repayment mortgage.

At the time everyone insisted I was an idiot.

I paid my repayment mortagage off in under 10 years.

And all my friends who had endowments that were going to pay their mortgages off in 10 years and leave them with a huge surplus at the end of 25 years, what happened to them?

:blink:

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