Mortgage fixed v variable

[Mojooo]

I might be in for my first mortgage soon.

Can anyone who knows sum up for the last 10 years at which point you would have been better of having fixed or variable?

I know very recently variable has been best due to the low base rate but it wont stay like that for the enxt 25 years - right

But am I also right in thinking with fixed morgages it only stays fixed for a shortish period of time before going to variable?

finally, you can change your mortgage with another supplier after a certain period right to go for a better deal?

Thanks

[scotal]

Mojooo said:

But am I also right in thinking with fixed morgages it only stays fixed for a shortish period of time before going to variable?

Depends, you can get 1,2 ,3,4,5 & 10 year fixed rates. So it depends what you opt for (and equally what is available to you, given loan to value, affordabilty, prevalent lending conditons.)

Mojooo said:

finally, you can change your mortgage with another supplier after a certain period right to go for a better deal?

Again depends what mortgage you set up. Most mortgages tie you in for a certain period, some do not. You can usually move a tthe end of the incentive period (i.e the end of the fixed rate, or the end of the Base rate tracking rate for instance), a very very few mortgages will tie you in beyond tat period. You can remrotgage during the tie in, but you would have to pay a charge to the lender. (and they can be pretty hefty.)

From what i've read so far, you would do well to speak to someone who knows what they are tlaking about prior to applying for a mortgage.... and thus YHM>

[bogwoppit]

There is no easy answer. A rule of thumb is: remember that lenders make a calculation based on what they think is likely to happen and price their products accordingly. That includes fees, time periods etc. That means that across a lender's product range, there is probably not much in it for the respective targeted customers of each. So if you got a tracker now it would probably be comparatively cheaper than an "equivalent" fix rate because it allows for a rate increase.

However, normally if you are a "mortgage we" you will almost certainly get a better deal (e.g. get a low-rate tracker or discounted, then just before rates go up fix - the key is to spot the upward trend before products get pulled). Of course, you can't predict what will happen so it is dangerous to rely on it totally - for instance this was my strategy but then of course the LTVs went through the floor and I might not be able to get a decent remortgage when the rates start to go up.

Then there's simply the question: are you comfortable not knowing if your mortgage payments will double within a year (say)? Many people get a fixed rate because it is "safer". That may also be priced into the product too.

[NDT]

I'm just about to remortgage and unfortunately all I can get is a fixed rate - nobody seems to want to do a variable at more than 85% LTV.

[scotal]

NDT, there are a very few about.
Not great rates though.

[sussexjob]

It would appear we are being shafted as normal to pay for past errors (self certification etc.), if you look over the last 30 years average interest rate 4%.

[scotal]

sussexjob said:

It would appear we are being shafted as normal to pay for past errors (self certification etc.), if you look over the last 30 years average interest rate 4%.

Bnaks have been told to build up their reserves..... they've also been told risky trading is bad. Thatleaves them with a fairly narrow number of ways of increasing those reserves.

New borrowers are also paying for the borrowers who are sitting on competitive fixed rates, or great lifetime trackers.

[NDT]

scotal said:

NDT, there are a very few about.
Not great rates though.

Yes, can't find any based on limited research.

Situation I'm in is that my current lender is prepared to lend based on the most recent valuation they did... 2 years ago.
So this makes the LTV less bad than it would look to another lender who would revalue the house.
Based on this we're at 87% LTV. (house valued at 610k, actually worth about 550k, with current mortgage of 527k)
If I stuck my forthcoming (25k) bonus in and borrowed a bit more money with a personal loan I can get to 80% fairly easily, giving me the option of a variable rate.
Based on a conservative assumption that rates sit still for a year then start rising in late 2010, ending 2011 at about 2.1%, which is what the market seems to expect, then I can make a reasonable reduction in interest by doing this - and hence a decent return on my 25k bonus, even after accounting for the additional interest on the personal loan.
Does this make sense to anyone or am I smoking something?