To ask for support re best mortgage deals; I'm not being lazy and not looking ; feel overwhelmed and so would appriciate advice!

[sugar4eva]

Hi , we have a very low tracker mortgage at the moment by de fault. Our fixed rate ended and our company put us on a 1 . 45 intrest on loan of 72 ,000 mortgage. We have always gone on fixed rate for peace of mind before as we were around in 80 s when mortgages shot up to something like 17 %.
Dh has started to look at fixed rate mortgages and the best one he can find is a five year fix at 3.84 % which wd increase mortgage by £ 80 a month
It is very tempting to stick to the low current one and risk it going up! Dh feels that rate of 3 . 84 is historically very low and a good deal despite the additional cost per month.
I am so confused. My original idea was to save the additional £ 80 pm as a buffer should we stay were we are and use the savings to pay the increased mortgage for a while if it does go up but dh says that wd only last a few months. We have made bad decisions in past and I'm really trying to get this as right as I can ! Any thoughts much appriciated! Thankyou .

If you're on the standard rate (base + x%) then you can swap at any time.

While not an FSA and therefore unable to advise you, I can say that we're in the same situation and we're sticking to the standard variable, putting money aside and then when the rates rise, we'll fix then.

You should go and see an IFA. See a "whole of market" one, not one connected to your bank (who'll only advise on that bank). I'd suggest you also choose one who charges. Mine charges £200 to arrange a mortgage (the initial meetings are free, he only charges if he does the work of sorting the mortgage). Some IFAs don't charge but take a commission from the providers of the product you buy. In the past, I've found this skews the recommendation (ie they recommend the products with the best commission).

Best possible choice is to gt a word-of-mouth recommendation - if you're in Glasgow, I'd highly recommend mine. He's arranged three different mortgages for me across the years and has more than saved me his fee several times over.

We also have a tracker mortgage and are paying a very low rate of interest (lower than yours). No way would I switch to a higher fixed rate of interest.

I would work out what the repayment would be if interest rates went up (e.g. to 3%, 5 or 10%). If you would be able to afford the repayment, I would stop worrying. It is very unlikely that interest rates will suddenly go up to 17%.

Whatever : do you mind telling me which company you are with in case it a better deal. Also how do we know how to predict if rates may go up ? My dh thinks that if mortgage I treat rates go up less liky to be good fixed rate deals.so in the I.ong run may pay more by sticking with tracker for now but if rates rise and no good deals we wd end up laying more anyway! Can advisors give advise likely patterns or just give advice on current deals? Thanks. !

Could you get one of the offset mortgages. Virgin one was the first one.

Sugar4eve- unfortunately it's not available now (it is Barclays, base + 0.29%). I looked on www.uswitch.com to find the best mortgage deal.

They are predicting that interest rates may rise a bit in 2015 but probably not a sharp increase.

There is no way of knowing for sure (without a crystal ball) whether you will be financially better or worse off switching to a fixed rate from your current low variable rate.

Musical :,I don't know what an offset mortgage actually is..sorry bit of an ostritch financially but trying to learn at ripe old age! ;)

Musical :,I don't know what an offset mortgage actually is..sorry bit of an ostritch financially but trying to learn at ripe old age! ;)

We are considering a fixed as we are on a 1.89% above base rate tracker (so 2.89 at present). We've found a 5 yr fixed for the same percentage so going for that. 3.5 is not a bad fix, it just depends whether you're mentally strong enough to ride it out to stay on base rate. It's unlikely it can go down further as it would bugger inflation but increases will take time, even if they went up 1% every single month (again, unlikely the economy couldn't handle it). If you want peace of mind, then fix.

Back in the 1980's base rates hit 17%+, so the rate you are quoting as a possible 'peace of mind' fix seems very reasonable.

An Offset Mortgage is only good if you have large credit balances/savings to offset against the mortgage account (debit).

In 1990's staff in Banks used to gloat about their Staff Fixed Interest rate mortgages of 5% which shows you how historically low current rates actually are, as you are hesitating about paying less than that.

Take the rate you are on work out the cost over the length. (Especially if the term is short then fixing is less worth it.)

Work out the fixed cost over that time.

Then redo ur original sums to see if the rate increased 1% a year etc what u would save/lose.

Work out at 1 year, 2 yrs etc what the rate would have to rise too to cost the same as the fix. Bearing in mind the cheap year, eg how much above fix.

Think about how likely it is too happen.

Offet is if you have savings. The interest u pay is offset again ur savings.
Eg a 70000 mortgage at 3%. Each month you should pay back 330 pounds. Say 180 pound of which is interest and 150 is capital repayment. If you then have 20000 savings, you only pay your capital repayment every month + interest on 50000 (70000 tho minus 20000) so about 45quid a month saved as well.

You can chose to use this 45 to lower ur monthly amount payable, or keep the monthly amount the same and overpay it slightly thus reducing the term.

Nb these are rough figures. Also if you offset ur savings they don't earn interest like they would in a savings account, but this is pennies these days.

Clear as mud??

I fixed for 10 years on 6.1 % so have lost out financially BUT i wanted to know what I would be paying every month. If I were in a better position to easily get accepted for mortgage deals I would have done the tracker. I look at it as at the time having a good deal, not having to worry about interest rates at all & paying a sum a month for my home that feels like a good price compared to rents.

I am watching this with interest.

Holidaysarenice very informative post. I didn't think you'd be able to make the calculations without knowingthe term OP would be paying over?

Horrible g

...grammar.

"...the term over which OP would be paying."

How much more can you afford to pay? Is it important that you know how much you are paying each month? If that £80 a month is at your limit you probably should remortgage now as if interest rates go up so will the fixed rates. I think there is reasonable competition at the moment as well so the fixes may go up more than the base rate increases. Not a FSA and as a relatively new homeowner on a 4.19% fix I simultaneously feel jealous of your low rate and lucky my rate is this low!