Variable or Fixed rates

Posted on 22 February 2011 by Gill Martin


We are coming to the end of a 10 year fixed deal (5.89%)in April. As we have paid extra we will only have about 18 months left owing £12,000. What is the best thing to do and will it work out the similar by going on a variable rate for this duration or borrowing an extra £15,000 for new kitchen extension which might enable us to go for a much lower fixed rate over a similar time frame?

Gill,

I must confess to being slightly confused by your question? If you only have 18 months left to run on your mortgage it will be touch and go as to whether or not it is worth the expense of remortgaging to a cheaper rate or staying where you are.

I believe that you are currently with BM Solutions and will revert to their current SVR of 4.84% on 1st May. Depending on how much equity you have there are cheaper rates available and many of these will include a free valuation and free legal service, but nearly all will also have a booking and/or arrangement fee to pay. You will need to compare the cost of staying where you are with how much it would cost to move to another Lender. It is also worth seeing what your lender has to offer existing borrowers. Most certainly BM Solutions have Fixed and Tracker rates available.

If you wish to borrow an extra £15,000 over the same period it won't make too much difference to the products you can choose from, but it will increase your monthly payments drastically.

I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and tell the consultant the date of your question, they will be able to look at your situation and advise you accordingly.

Peter

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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