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Mortgage advice - anyone think I should go for this rate?

(26 Posts)
helpmehelpme Mon 14-Jul-08 11:09:37

We have a mortgage to pay of about 100 grand over 16 years. Our house is worth over twice that apparently even in this market.
We're now on a SVR of 7,14%
My bank is offering me 2 yrs or 5 yrs at 6.49.
Very portable and the usual redemption fees apply.
This would bring our montly payements down to £920 a month which although huge it's less than the present grand!
My bank is Yorkshire Bank which seems to be backed by the Banks of Australia and NZ which seem less vulnerable to the USA's madness at the moment.
Or is that all tosh?
I am panicking that if we don't snatch at this rate I wake up next week and interest rates will be 10%.
Just so uncertain what to do - am also very pregnant and fearful of making a big mistake!

I would massively appreciate any advice! My instinct is to go for 5 years at 6.49. I feel certain that rates aren't going to go down much!

Kewcumber Mon 14-Jul-08 11:12:26

very difficult to advise - if anyone knew what interest rates were going to do they're be billionaires now not reading Mumsnet!

As you seem very anxious I would fix your rate for 5 years if you think you can afford it - there is no sign as far as I can see that there's going to be a vast hike in interest rates. However have you consulted a broker who will tell you if you can get a better fixed rate elsewhere.

Kewcumber Mon 14-Jul-08 11:12:55

don;t worry about teh US - whomever you fix your rate with they (or whomever buys them) will have to honour it.

TheFallenMadonna Mon 14-Jul-08 11:14:07

I don't know anything about interest rates trends I'm afraid.

Don't forget to factor in the arrangement fee though.

helpmehelpme Mon 14-Jul-08 11:14:27

Thanks Kewcumber, of course we don't know what will happen, but what I'm wondering is, does that sound like a good rate to people on here. I just appreciate the impartiality of mumsnet! I'm calling brokers at the moment.

helpmehelpme Mon 14-Jul-08 11:15:38

Yes, the arrangement fee is a grand but we're thinking of paying it up front to take our monthly payments down and give us peace of mind of a sort for the next few years.

Kewcumber Mon 14-Jul-08 11:16:27

How much LtV do you have?

Kewcumber Mon 14-Jul-08 11:18:15

6.48% sounds high for two years but not 5 (though you could probably do better if you have less than 75% LtV)

helpmehelpme Mon 14-Jul-08 11:18:48

(hides under chair with embarrassment and Awe of Qcumber)
What's that???? {blush]

daftpunk Mon 14-Jul-08 11:22:02

barclays are doing 5.99 for 5 years but you have to have less than 80% ltv.

Kewcumber Mon 14-Jul-08 11:22:31

{grin]

Loan to Value

Value of mortgage dvidied by value of house

(In fairness I am an accountant so should know this kind of thing!)

helpmehelpme Mon 14-Jul-08 11:24:29

Not sure what ltv is I'm afraid!

Do you think it's odd to be drawn to the idea that Australian and NZ banks might be more stable than others which are more vulnerable to the US market?

Thanks so much for all feedback.

helpmehelpme Mon 14-Jul-08 11:25:34

Oh I see! I think the house is worth something between 250 grand and 300 grand. so our LTV is a third?

Kewcumber Mon 14-Jul-08 11:26:29

Ah just read your house is worth about £200k and mortgage about £100k?

You should be able to do a lot better than that...

Kewcumber Mon 14-Jul-08 11:30:30

First Direct are doing 6.19% for 10 years with a lower arrangement fee.

I really thin kyou ned to consult a broker.

(Yes you are weird for wanting an australian bank grin)

Kewcumber Mon 14-Jul-08 11:34:52

I don't understand why your mortgage repaymetns are so high - 25 year mortgage at 6.54% (fixed for 5 years with Alliance & Leicter) should only cost £678.

Are you repaying oevr a shorter period than 25 years?

Kewcumber Mon 14-Jul-08 11:36:31

Aha - READ the OP Kew!!!

Still should only be £841 (with lower arrangement fee)

https://www.applications.alliance-leicester.co.uk/icm/yourquickquote.aspx

nkf Mon 14-Jul-08 11:37:16

I think there would be better. That's a hefty arrangement fee.

Kewcumber Mon 14-Jul-08 11:43:24

When you talk to a broker ignore interest rates and ask for calculation of monthly payments during period (I think they may be legally obliged to provide this now) - interest rates can be very misleading and there are lots of differnt ways to apply them.

All you are intersted in is how much you are going to pay.

Agree you should be able to do slightly better with lower fee up front.

I think in this market a broker is in order.

helpmehelpme Mon 14-Jul-08 11:53:27

Thanks so much, I really wanted exactly this kind of advice! I'm hitting the brokers now!

Blessings be upon the heads of you kind mumsnetters who are not financially phobic and have given your advice here! My respect for you is almost violent. I feel I should stand as I type.

My mother, father, and dh are all perfect vacuums of financial acumen. It's awful. I have fantasies of getting a grip but am just too inconsistent to do so!

Kewcumber Mon 14-Jul-08 12:00:53

<<preen>>

smittenkitten Mon 14-Jul-08 12:33:49

I can imagine than in 5 years time that while interest rates might be about the same, the credit crunch should have lifted which would make borrowing cheaper.

but if you can find a rate that's competitive now and you want to be able to budget, I'd go ahead and get a fixed rate.

Poppycake Mon 14-Jul-08 12:50:01

Have you been using sites like moneysupermarket? THey are quite good for giving you the real cost of borrowing i.e. factoring in arrangement fees etc.

Also don't forget trackers - means you're not protected from rate rises of course, but does mean that you're not left high and dry if the rates did fall in say 3 years time. And with some there is no fee for coming out, so you can leave as soon as you see a better rate, if and when the credit is not so crunchy!!

I was having exactly the same panic 2 months ago - even worse when you're pregnant too! Try not too worry too much - it's all a bet anyway, so you can only do your best smile

helpmehelpme Mon 14-Jul-08 13:20:23

many thanks, have just done a huge session with John Charcol so we'll see what they come up with.
But the fixed rate arrangement fees are high and the rates aren't great at the moment
Apparently the banks are raising money where they can.

hmm
all quite scary!

bumpybecky Mon 14-Jul-08 17:24:00

we're in a similar positiond and have found that not all deals are avalaible via the brokers (yes, even whole of market brokers). I've found a better deal with HSBC directly than either of the two independant brokers could find me.

We're going for a lifetime tracker at 5.99% (base + 0.99%) fee free, free legals, no early redemption. We've got £85k at just under 50% LTV. They've saved the money for us even though we won't complete until November 1st (when current fix ends).

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