Mortgage advice (2 Viewers)

[Otis]

I think I may have already have answered my own question to be honest, but our current mortgage deal runs out shortly. We went for a fixed term last time and my thoughts are to go with a fixed term again this.

Think we lost out a bit last time because the base rate remained really low and if we had gone for variable we may have paid less, but my thinking now is with Brexit happening a lot of analysts are saying there could be tough times ahead, at least for the first couple of years or so anyway.

Just wondering what everyone else on here is doing, or intending doing.

Think if we go for a variable rate it could bite us on the bum if there's another recession and the economy struggles and the base rate does rise somewhat.

I know they have purposely been keeping it very low and there has been talk of a rise for sometime and that hasn't happened, but I do fear that Brexit will cause a rise.

Thoughts?

 

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[Deleted member 5849]

Fixed allows yu to plan and budget.

IMHO I think you'd be crazy to gamble on variable. OK, you might lose out on a fixed term but, as it's your home, it's all about what's affordable, and being able to plan your life in advance.

 

[Kingokings204]

Hi Otis, I agree with NW above for a start. Everything about fixed term is true. You can budget and with everything so up in the air why take a risk when you don't have to.

Also now brexit will happen we were told interest rates would rise. Ok we haven't left EU yet but they have come down again. Another 0.25%. Great for us as borrowers but not good for savers.

Long term no one knows what is going to happen to interest rates but for the next few years they aren't going anywhere significant. Go fixed.

 

[tom88]

Fix it whist the rates are low - I have just bought a new house as I needed an upgrade now we have a little one. I wanted to fix it for 5 years but as its a new build I'm not allowed too I can only fix it for 2 years.

I move in to my house in 3 weeks on Friday

 

[Otis]

Yep, fixed is what I intended anyway. Just need to decide whether to go for a 3 year or 5 year deal.

Cheers.

Explained it to my missus 3 times and all I get is blank looks.

 

[Otis]

Last time out we got a fixed deal and talked it over with the mortgage advisor for 30 mins or so, but when we got the yearly mortgage statement come through my missus denied all knowledge of signing anything and was shocked at how much we were paying each month.

 

[Nick]

I prefer Fixed, don't like to gamble with that sort of thing.

Although mine has gone passed the fixed term so I am gambling at the minute and paying less than I was before!

Reminded me to sort it out.

 

[tom88]

Yep, fixed is what I intended anyway. Just need to decide whether to go for a 3 year or 5 year deal.

Cheers.

Explained it to my missus 3 times and all I get is blank looks.

I cant really help on this as I don't know your personal circumstances i.e your age, financial situation, term on the mortgage etc. I am currently 28 and I am 4.5 years into my mortgage. If it were not for this rule of "new builds" not being able to fix more than 2 years I would have fix it for 5 years. That way I know what I'm paying for the next 5 years and I can budget around that.

Also another point to think about is, why not fix it for the amount of years that lets you pay the least back? Then with any spare cash you have each month/year pay it off the mortgage as a lump sum. That way you will save money on interest and paying out each month?

 

[Grendel]

Ive been on a variable rate for years. I have a mortgage now that doesn't cost much more than one I had when I first started but for a much higher amount.

I can't see the economy sliding out of control and the days of high interest rates long gone.

 

[chiefdave]

I'm always cautious with this type of thing as I'd worry too much that the interest rate would suddenly shoot up if I was on a variable. Think I read that the Coventry are doing a 25 year fix now.

 

[Monners]

Depends on age, how long to go etc.. . Don't have long left (mortgage wise I mean - not on the mortal coil!) so not worth doing fixed with the rate so low.

 

[mrtrench]

Fixed rates just now are tremendous value - as low as 2.5% for 5 years. I cannot see many scenarios where this wouldn't be the best option. I'm not sure I completely agree with the fear of Brexit or recession causing interest rates to rise - I think if anything it will see rates stay low or even fall. I understand the argument that inflation may rise from a weak pound and the BoE would be forced to raise interest rates to keep inflation in check. However that would be a short-term impact (unless the pound just kept on falling). The BoE will want to keep rates low in that scenario to keep the economy buoyant. I'd be more worried about interest rates rising because growth starts to bound along very nicely.

 

[Gazolba]

Whatever you do will be the wrong decision so decide what to do and then do the opposite. Of course you will still be wrong.

 

[Otis]

Fixed rates just now are tremendous value - as low as 2.5% for 5 years. I cannot see many scenarios where this wouldn't be the best option. I'm not sure I completely agree with the fear of Brexit or recession causing interest rates to rise - I think if anything it will see rates stay low or even fall. I understand the argument that inflation may rise from a weak pound and the BoE would be forced to raise interest rates to keep inflation in check. However that would be a short-term impact (unless the pound just kept on falling). The BoE will want to keep rates low in that scenario to keep the economy buoyant. I'd be more worried about interest rates rising because growth starts to bound along very nicely.

This one is less than 2% for 5 years.

Sounds like a bargain.

 

[mrtrench]

This one is less than 2% for 5 years.

Sounds like a bargain.

I agree - what's not to like?

 

[Nick]

This one is less than 2% for 5 years.

Sounds like a bargain.

Where is that? Might have to have a look.

Think mine is about 3.2 at the minute

 

[Otis]

Where is that? Might have to have a look.

Think mine is about 3.2 at the minute

Our last one was 2.69% fixed for 2 years. This one is 1.99% for 5 years.

Santander.

Need to read the small print.

 

[Grendel]

Our last one was 2.69% fixed for 2 years. This one is 1.99% for 5 years.

Santander.

Need to read the small print.

The question is does it attract fees and valuation charges?

The other thing you need to look at is the structure of it. You I assume have a repayment mortgage. When you switch often the new lender tends to change the interest and capital element. In short of you switch you will not pay much capital down but just interest so in 5 years you may owe as much as you did to start so actually are paying a far higher rate

 

[Johnnythespider]

Depending on how much you want to remortgage as a percentage of your homes value, Coventry building society are doing 2.39% for 10 years. I'm on a variable rate of 1.35% at the minute.

 

[Astute]

I would fix for as long as I thought that I would stay in the house. And check what the redemption fees are just in case.

The best thing that you can do is overpay each month. Just paying an extra £50 a month can knock years off the length of the mortgage. What I also used to do was when a fix was over I would knock the years down to pay what the variable rate was going to be. That stopped having to make overpayments.

 

[Monners]

Yes - overpay if you can - gives you options further down the line.

 

[Marty]

I fixed 24th June. I waited for the results of Brexit first, I think I was a little hasty as the interest rates had dropped slightly since. I got 1.99% with Santander fixed for 2 year. Have a look over payment calculators, the one on Money saving expert is very good. I over pay mine by a fair amount. If I keep it up I should be mortgage free by mid 30's.

 

[Otis]

I fixed 24th June. I waited for the results of Brexit first, I think I was a little hasty as the interest rates had dropped slightly since. I got 1.99% with Santander fixed for 2 year. Have a look over payment calculators, the one on Money saving expert is very good. I over pay mine by a fair amount. If I keep it up I should be mortgage free by mid 30's.

Almost exactly the same deal. They had 1.99% over 3 years or 5 years.

No fee. I am already with Santander anyway, so this is just a new deal with the same mortgage lender.

Looked at other lenders but they all had a fee of between £1,000 and £1,500.

 

[Marty]

I was an existing customer too. The best deal was 1.59% with RBS I believe. but with a £1500 fee. so that wiped out the small % saving straight away. I'm looking at moving soon so I felt like I got the best deal for me at the time.

 

[Grendel]

Almost exactly the same deal. They had 1.99% over 3 years or 5 years.

No fee. I am already with Santander anyway, so this is just a new deal with the same mortgage lender.

Looked at other lenders but they all had a fee of between £1,000 and £1,500.

If it's the same lender then take it - I assume the period of loan remaining is the same?

 

[skybluesam66]

the good variables are gone, now the fixed rate is so low
my variable tracks to base rate for life - currently paying 0.44% the best financial decision i ever made

 

[Otis]

If it's the same lender then take it - I assume the period of loan remaining is the same?

Yes. Sorry, meant to say, mortgage still over the same period of time. It is just the previous deal that is about to run out.

 

[xcraigx]

I really can't see the BoE doing anything to rock the boat for the foreseeable so low interest rates will be around for a few years yet IMO.

When I got my mortgage I had a lot of independent help trying to choose the right deal. I then ignored all that expert help and went for a tracker rate. Within 12 months my monthly payment went from £550 to £315 and that's how it's remained for years and hopefully in my case for a few more years to come

 

[Terry Gibson's perm]

I have a two year fixed with NatWest but we have decided to sell and hope if this sells they will allow me to move the mortgage as we hope to buy a cheaper property, if not we are one year in next month so can buy out for about £1500, next time I will fix for as long as possible as I can't be bothered pissing around every two years and having to deal with the mortgage people.

 

[Otis]

I have a two year fixed with NatWest but we have decided to sell and hope if this sells they will allow me to move the mortgage as we hope to buy a cheaper property, if not we are one year in next month so can buy out for about £1500, next time I will fix for as long as possible as I can't be bothered pissing around every two years and having to deal with the mortgage people.

Yeah, get that.

Easiest option for us though is the best option too.

Did some comparisons and Santander was the best anyway. To set up this new deal it took me 10 mins online and that was it, job done.

Didn't even have to speak to anyone.

 

[wingy]

Fix it whist the rates are low - I have just bought a new house as I needed an upgrade now we have a little one. I wanted to fix it for 5 years but as its a new build I'm not allowed too I can only fix it for 2 years.

I move in to my house in 3 weeks on Friday

I'd like to know the logic behind such a restriction?
Seems very arbitrary.
A house is a house after all.
Sounds like someone should bring about a class action.
Maybe I'm missing something logical, all houses were new at one point weren't they!

 

[wingy]

On a separate note fixing has to be the way if you want certainty.
You will naturally end up paying slightly more as let's face it, it's expert opinion on where the rate is likely to go that they employ.
Not to say there cannot be a spanner in the woks though.
Shockwaves are rare but can happen, take black Monday in the nineties, we were paying out near £900 including insurance for a spell back then.
Very painful and needless to say we went to a five year fixed on the next house.
Worth remembering Interest rates are artificially low as a result of 2008 and commentators have been speculating "next year" for about 3years now.
Currently it's all about the pound which is too close to parity with the Euro and Dollar, watch that space!

 

[mrtrench]

You will naturally end up paying slightly more as let's face it, it's expert opinion on where the rate is likely to go that they employ.

No reason to suspect you will pay more. Fixed rate mortgages are based off interest rate swap rates in the London derivatives market. They are calculated to be neutral against the market's expectations on future base rates.

 

[wingy]

No reason to suspect you will pay more. Fixed rate mortgages are based off interest rate swap rates in the London derivatives market. They are calculated to be neutral against the market's expectations on future base rates.

Only from experience Mr trench.

 

[tom88]

I'd like to know the logic behind such a restriction?
Seems very arbitrary.
A house is a house after all.
Sounds like someone should bring about a class action.
Maybe I'm missing something logical, all houses were new at one point weren't they!

I agree with you but my mortgage lender says they cant offer 5 years on a new build as the prices can fluctuate both ways drastically within the first couple of years.