Advice, opinions - stay on the variable roulette wheel or fix now?

J

JL77

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I am with EBS and am concerned as everyone else is about increasing rates. I was on a fixed rate of 4.75% for 3 years which ended last november. I am currently on a variable of 2.63% costing me 840 a month. In May the rates will rise to 3.23% and my payments to 920 a month.

I enquired about fixing and unfortunately I missed the chance to fix at 4.05% as I was unsure and hesitant about what to do. The rates that I have been informed on are 4.7% for 3 years and 5.3% for 5 years.

If I took on the 4.7% rate my payments would rise to 1120/month. An increase of 280/month. I am unsure whether to go for the current rate as I am sure that they will rise again. I am in negative equity so switching is not an option.

As I see I can stay on the variable and take the hits when they come or fix it and forget about it? I know that I have to take affordability into it. I am just worried about missing a rate thats under 5% for fixing.

Anybody out there in the same boat and contemplating either way? Any advice comments would be greatly appreciated...
 
Hi
I had a fairly similar post last night here - and took the plunge today and fixed with EBS for five years at 4.35.
Im no financial adviser and no background in this area - I based my own decision on my ability to make the repayments at the five year fixed rate and also how important having that peace of mind is to me. the five year rate has me absolutely down to the wire with repayments but at least I know that they cant rise for five years and can plan around being totally broke for the next five years. Its a gamble and its a very individual decision I think - no one knows what will happen - maby look at things like - how secure is your income over the next five years, how likely are you to need to sell etc during that time? how much can you repay- whats the max rise you could take the hit on over the five years on a variable - anyway best of luck to you I had a hard time deciding myself so know what its like!
 
Those rates of 4.7% for 3 years and 5.3% for 5 years are not great. Why pay more straight away just because you think it could save you money in a couple of years time.
The chances of you saving money on that 3 year rate is pretty slim in my opinion. Even if rates go above 4.7% - it probably won't do so for at least a year. You will have been paying over the odds until rates reach 4.7. If you can afford the 4.7% repayments - just put the difference into a savings account and then use it if/when rates go higher. (Be strict - put the money aside don't spend it) .

www.*****************.com
 
I am on a 1 year fixed till next Jan. I have been discussing this with friends and have come to conclusion that maybe banks are trying to scare people off variable rates and onto higher fixed rates... If they keep putting up there own variable and then when the ecb starts to increase it's rates it may cause more people to who are struggling to default. I think everyone has to weigh up options for themselves.
 
I had exactly the same dilemma with the EBS and got the exact same rates offered as you. The 3 year deal doen't look to me like saving anything. I would pay a lot more, and 3 years may not be enough to see the benefits. The 5 year deal was really pushing it and I don't have the confidence to put myself in that position, especially since you are completely locked into that for 5 long years.

So what I have decided to do, since I am in such a decisive mood, is fix the payment to the amount that the 5 year deal would cost. The extra payment is going to the balance instead of interest. I can afford it at the moment and the money is definitely not being wasted. As rates rise, our own payments won't change for a while so I do KIND of have some stability. Thats just my own attempt to make myself feel better though, so nobody try to tell me I am being dim!

Thats only what I did though, it may not suit you but I just wasn't brave enough to embrace a rubbish fixed rate and get charged an extra 180 a month. I just have my fingers crossed that the rates don't hit 10% in the next couple of years, otherwise I will regret not taking one of these deals only slightly less than the day I actually BOUGHT a house.
 
Last edited:
LittlePiggy said:
So what I have decided to do, since I am in such a decisive mood, is fix the payment to the amount that the 5 year deal would cost. The extra payment is going to the balance instead of interest. I can afford it at the moment and the money is definitely not being wasted. As rates rise, our own payments won't change for a while so I do KIND of have some stability. Thats just my own attempt to make myself feel better though, so nobody try to tell me I am being dim!
Click to expand...

If you're being dim then meet your brother as I am using a similar strategy!

www.moneybackmortgages.ie
 
That sounds like a plan to me. You're over-paying your mortgage and this will knock years off the term if you keep paying the amount you're paying and the rates don't go up too much! I've 4.85% fixed for another year and wish I could do what you're doing.
 
Im doing the same. i have a savings account and when my fixed is up i will pay a lump towards my mortgage and maybe fix if there is a rate i like in jan. its just a guess game. i wish ye all the best
 
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