I'm confused - new mortgage rate offer

C

Calcutron

Registered User
Messages
13
Hi All,

My fixed rate is up at the end of the month. With recent interest rate drops I obviously want to make sure I get the best deal to take advantage of this.

In the renewal letter my bank has sent me they say that if i don't reply before Dec 1st I'll automatically move to the standard variable rate of 5.6% (5.8% APR).

However they go on to say if I act quick i can take advantage of one of the following offers:
Flexible Vartiable mortgage - 5.89% (6.1% APR)
or
Fixed rate Mortgage

Obviously I'm not going to fix, but I'm confused about how the flexible variable rate is better value than the default standard variable rate.

Can anyone make sense of this for me?

Many thanks,
C
 


the Flexible variable rate may be higher if for example it offers other facilities... such as payment breaks, reduced payments , increased payments or further credit facilities... best to ask the Bank for clarification of the two rates... otherwise stay as you are...not the climate to fix or to agree to a higher loan margin..
 
Flexible variable may be a tracker. While this could work out cheaper in the long run, as the bank would be obliged to pass on future rate cuts with a tracker, which they're not obliged to do with a standard variable.
 
It seems a lot of people who are due to step out of their current deal will be better off on the standard variable rate.

For example Nationwide state that their SVR will never be more than 2% above base, I am yet to find a tracker rate that appears to be more competitive than that.
 
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