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Should we move onto a fixed rate mortgage?

(15 Posts)
ForeverOptimistic Wed 17-Sep-08 09:59:47

We are really struggling at the moment, we moved onto an interest only mortgage when I went on maternity leave and 4 years later we have not been able to change back to repayment.

We are currently on a variable rate but with all the doom and gloom with the financial markets at the moment I am quaking in my boots at the prospect of banks raising their borrowing rates. I haven't had any quotes but I guess that if we do move onto a fixed rate it will cost us a few hundred more a month which we cannot afford but at least it will take away some of the stress.

Is this a sensible thing to do?

CountessDracula Wed 17-Sep-08 10:03:33

Fixed rates are coming down now
You can get ok deals
I think the general thought is that interest rates will stay put or come down a little

BecauseImWorthIt Wed 17-Sep-08 10:07:07

Fixed rate is a good idea from a budgeting point of view as you know each month what you will have to pay.

Make sure as well as getting a good rate that you aren't tied into the lender when it finishes, or that there aren't any hidden costs.

We paid £900 for a 2 year fixed rate mortgage from HSBC, but it was worth it because we got 4.99% which is what we were paying previously and much lower than anything that's been available for the last 6 months or so.

Gobbledigook Wed 17-Sep-08 10:10:20

It's difficult - I guess the first thing to do is get some quotes, even if that's just by using some of the mortgage calculators, for the main lenders, online.

I much prefer fixed rate - even if it's a bit more at least I know what is going out each month. Dh is commission based adn I'm freelance so it's difficult enough sometimes if income fluctuates (though it's usually mine, not dh's) - I like to know exactly what my outgoings are. Being the character that I am, I would not sleep if I was wondering what would happen to my mortgage payment from month to month - especially as ours is quite high.

ForeverOptimistic Wed 17-Sep-08 10:14:43

Hmm. I think I will get some quotes. I know that they say that rates are coming down but I am worried that the banks will have to recoup losses somewhere and they may put interest rates up.

If we do move onto a fixed rate it will be sods law that rates will come down... Perhaps its time for a name change. grin

DaisySteiner Wed 17-Sep-08 11:09:25

If you're on a tracker rate that follows the bank of england's rates then I would stay put as you should find that your mortgage comes down later this year/early next year.

ForeverOptimistic Wed 17-Sep-08 17:49:29

We are on a tracker rate but I don't think it follows the bank of england rate as we have had rises recently even though base rates have been coming down. We are with Abbey.

MARGOsBeenPlayingWithMyNooNoo Wed 17-Sep-08 18:00:29

I said this earlier to someone else - pay off as much of your capital as possible.

Will you try to do a part repayment if you can fix it? or all your mtg on a fixed?

MARGOsBeenPlayingWithMyNooNoo Wed 17-Sep-08 18:03:13

Ah - my ma used to work for the ShAbbey, I'll ask her later if she knows about the flexibility of their mortgages.

ForeverOptimistic Wed 17-Sep-08 18:04:21

We can't do a part payment as we don't have any spare money.

I am beginning to feel really stupid as when we bought this house 6 years ago I didn't envisage the way things would be now and that is down to dh burying his head in the sand and me living in cloud cuckoo land. blush

MARGOsBeenPlayingWithMyNooNoo Wed 17-Sep-08 18:12:00

Not even £50?

Don't feel stupid, try moneysavingexpert website and see if you can work on reducing your outgoings.

ForeverOptimistic Wed 17-Sep-08 18:18:07

Thanks,I will have a look at that website Margo.

I have just looked on Abbey's mortgage website and their fixed rates are actually cheaper than the standard variable rate. How can that be? I thought that the fixed rates were usually higher? Is there a catch somewhere? If not I am going to switch tomorrow, we will save quite a lot of money if we switch and we have the security of knowing it won't get any worse for a while.

MARGOsBeenPlayingWithMyNooNoo Wed 17-Sep-08 18:42:05

look at the APR, that's the best way to compare value for money between lenders - reservation fees are quite high at the moment.

please, please, please - if you can pay off any of your capital you will be saving yourself money. At this moment in time you're no further forward in paying off your mortgage.

sophy Wed 17-Sep-08 19:31:19

I think that while there is so much uncertainty in financial markets interest rates will stay low -- they need to in order to maintain liquidity in the banking system. This is despite the fact that inflation is rising which is normally an indicator that rates will go up.

We have been on variable rate tracker for past year and our payments have fallen by £250 a month, we will stay on the tracker for now.

I'm far from an expert though (but am an ex-financial journo).

ForeverOptimistic Thu 18-Sep-08 12:25:41

Well I may have made a mistake but I have just agreed to a fixed rate deal for 3 years. We are currently paying £908 per month on a variable rate, (interest only) with the fixed rate it goes down to £876. I know people are saying that interest rates will come down but I just can't take the risk that they may go up.

I have compared our existing outgoings to what we were spending 4 years ago and it is shocking! Four years ago our mortgage was £200 less than it is now and we were on a repayment deal! Our monthly direct debits utility bills etc were £300 per month they are now £500. Dh was spending £300 a month on petrol and is now spending nearly £600 and just to finish us off I gave up work as well. Oh and don't get me started on shopping, can anyone actually still afford to buy fruit these days? hmm

I have a 14 day cooling off period with the mortgage deal. When it comes to financial matters I have a history of making the wrong decisions so I will give this a lot of thought.

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