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Original poster

which mortgage deal?

11 replies

moshie · 10/08/2009 13:11

My discounted mortgage is coming to an end so I need to switch. Staying with current provider for various reasons, so the choice is between:
1% below the SVR (currently 4.99%) with afee of £399
or
3 year fix at 4.99%

Apparently the SVR is going up tomorrow so I need to decide today. Any thoughts?

OP posts:
Original poster
moshie · 10/08/2009 13:12

Oh, no fee with second option.

OP posts:
justaphase · 10/08/2009 13:22

I am reading this to mean that the SVR is now 5.99%, so you are paying 4.99% now on the discounted deal plus a £399 fee.

Let's face it, rates are not going down any further so even if they stayed the same you are only going to loose the £399 fee.

Rates only need to go up by 0.50% for you to actually be better of with the fixed deal assuming a £100K morrtgage. And I would say this is very likely to happen at some point in the next 2 years. So I would say go with the fixed deal.

Original poster
moshie · 10/08/2009 13:49

Sorry, I wasn't very clear there. The SVR is currently 4.99, but expected to go up tomorrow, what to I don't know.
The first deal would be 1% below SVR, with a fee of £399
The second deal is fixed at 4.99% for three years with no fee.

I'm thinking to fix. Does it still look a good buy with those figures do you think?

OP posts:
justaphase · 10/08/2009 13:55

Less clear cut in this case. Depends what you expect to happen to interest rates. Based on my expectations, I would say yes, fix is better value.

amidaiwish · 10/08/2009 14:03

i would fix. 4.99 is good. who is that with (nosy, my tracker runs out in nov so need to start looking now...)

Original poster
moshie · 10/08/2009 14:09

Thank you, will fix.

OP posts:
TDiddy · 10/08/2009 14:43

Ideally you would have considered switching to tracker with cap at 5pc or similiar but you do pay a fee for these it depends on the mortgage amount.

Of the two options above, I agree that the fix makes more sense, though.

Original poster
moshie · 10/08/2009 16:02

That's with the Principality, but there were lots of good deals on the money supermarket website.

OP posts:
TDiddy · 10/08/2009 16:09

a tracker with a cap is ideal, i think

justaphase · 10/08/2009 16:16

A tracker with a cap would be ideal on principle but the problem with the funky bells and whistles deals is that you have to pay a fortune in fees to get them.

Banks are not stupid - they will make sure a deal makes them money - otherwise it will not be on the market.

So I think the best strategy for mortgage deals and financial products is - keep it simple.

TDiddy · 10/08/2009 18:57

I did a tracker with a cap with Coventry BS on a property recently and I calculated that it was worthwhile. ALso think that HSBC or First direct is doing one. I think you need to borrowing a maximum of either 60pc or 75pc of the property value though. The materiality of the fee depends on the size of the loan I guess.

Keeping it simple is generally a sound principle, though.

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