Good time to start a 5yr fixed mortgage? (FTB)
Discussion
My other half an I have just done the same thing.
We chose a 5 year fixed for the following reasons
1). Cashflow wasn't so tight that the 5 year would be a stretch
2). The new Governor of the Bank of England is itching to raise the base rate as soon as he can justify it, so a new mortgage in 2-3 years may be more expensive
3). The consistency for 5 years will be nice
4). We can relax and not have to keep looking through mortgage stuff to help.
Were cash tighter we may have gone 2 years, but we decided to play the long game
We chose a 5 year fixed for the following reasons
1). Cashflow wasn't so tight that the 5 year would be a stretch
2). The new Governor of the Bank of England is itching to raise the base rate as soon as he can justify it, so a new mortgage in 2-3 years may be more expensive
3). The consistency for 5 years will be nice
4). We can relax and not have to keep looking through mortgage stuff to help.
Were cash tighter we may have gone 2 years, but we decided to play the long game
We are planning on taking another 5 year fixed rate in March once our current 5 year expires. Seemingly the mortgage comes up at a time when the prospect of financial stability is most appealing! Nobody can tell you whether it will be the be cheaper on average over the 5 years but you will know what it will cost.
cava said:
Good, glad I'm not the only one then 
According to some comparison sites, fixing for 5 years rather than 2 years results in monthly payments that are about 10% more expensive. It sounds like quite a lot when I put it in those terms, so hopefully it would save more later on.
It was 7-8% higher for us I think. But as I said we are paying for stability as we can afford it as we have borrowed way less than the bank wanted to lend us! According to some comparison sites, fixing for 5 years rather than 2 years results in monthly payments that are about 10% more expensive. It sounds like quite a lot when I put it in those terms, so hopefully it would save more later on.
You couldn't have gone to HSBC then!
I have just been refused a remortgage of less than £75k on a LTV of less than 20% - my and my wifes PT salary match the mortgage amount and yet "affordability" is the reason given.
My 2 current accounts and my business account are now being closed - been with them over 30 years as well so they can see how I operate my accounts (very well actually).
MUPPETS!
David
I have just been refused a remortgage of less than £75k on a LTV of less than 20% - my and my wifes PT salary match the mortgage amount and yet "affordability" is the reason given.
My 2 current accounts and my business account are now being closed - been with them over 30 years as well so they can see how I operate my accounts (very well actually).
MUPPETS!
David
sumo69 said:
You couldn't have gone to HSBC then!
I have just been refused a remortgage of less than £75k on a LTV of less than 20% - my and my wifes PT salary match the mortgage amount and yet "affordability" is the reason given.
My 2 current accounts and my business account are now being closed - been with them over 30 years as well so they can see how I operate my accounts (very well actually).
MUPPETS!
David
Do you have other commitments? Seems strange if you earn £75k and trying to borrow £75k, they would decline it on affordability alone.......I have just been refused a remortgage of less than £75k on a LTV of less than 20% - my and my wifes PT salary match the mortgage amount and yet "affordability" is the reason given.
My 2 current accounts and my business account are now being closed - been with them over 30 years as well so they can see how I operate my accounts (very well actually).
MUPPETS!
David
Bank of England says the BOE will not go up to 0.75 until 2016 (Until unemployment is under 7 million) but they also said if things get out of hand (inflation etc) then it will go up earlier. So if you fix to a 2 year you will come off just as everything goes tits up!
This new government backed schemes have given the money markets the jitters and if it does inflate the housing market then % will go up.
I have just fixed with Nationwide at 3.09% for five years and no fees whatsoever. (Existing customer)
Their other 5yr fixed had a £900 fee and was 2.89%.
So I am paying 1.01% more over five years and that equals to about £320, why do people pay the fee?
?
I can also get 2% interest on that cash whilst still having it available in emergency.
Or am I missing something, I aint no good with numbers.
This new government backed schemes have given the money markets the jitters and if it does inflate the housing market then % will go up.
I have just fixed with Nationwide at 3.09% for five years and no fees whatsoever. (Existing customer)
Their other 5yr fixed had a £900 fee and was 2.89%.
So I am paying 1.01% more over five years and that equals to about £320, why do people pay the fee?
?I can also get 2% interest on that cash whilst still having it available in emergency.
Or am I missing something, I aint no good with numbers.
It's horses for courses.
Lenders have factored in rate rises into their fixed rates so estimate that rates will raise at some point. They hope to have made more in the period before rates rise than what they may "lose" after it's risen.
Everyones situation is different. If you're comfortable perhaps paying a bit more for a couple of years rather than struggle if rates had increased then go for it.
It's all a gamble!
Lenders have factored in rate rises into their fixed rates so estimate that rates will raise at some point. They hope to have made more in the period before rates rise than what they may "lose" after it's risen.
Everyones situation is different. If you're comfortable perhaps paying a bit more for a couple of years rather than struggle if rates had increased then go for it.
It's all a gamble!
Sarnie said:
Do you have other commitments? Seems strange if you earn £75k and trying to borrow £75k, they would decline it on affordability alone.......
no - no other loans but child care costs were raised which amount to £700 per month. However, I am NEVER overdrawn so it's madness really.Do you fancy taking a look for me?
David
I went for a 5 yr fixed recent,y,paying about .5% extra, but being self employed the hoops to go through are pretty extensive. Who knows what banks lending criteria and opinions will be in 2years time.
I personally don't see base rate going up for quite some time and if financially quite secure, I do think a very low 2 yr deal fixed or otherwise, build up some more savings and remortgage at a better ltv for a long fixed deal would be the ultimate strategy. Over 7-9 years I think this will give the best value for money.
I used to think, base rate would surely go up, but I was saying this 3 years ago, and people on low level trackers have been laughing. They could of been overpaying which more than compensate for the rates increase which realistically would be slow and by .25% a time.
Anyway, talk to resident mortgage man Sarnie, he sorted mine and my parents out and countless other PH members.
I personally don't see base rate going up for quite some time and if financially quite secure, I do think a very low 2 yr deal fixed or otherwise, build up some more savings and remortgage at a better ltv for a long fixed deal would be the ultimate strategy. Over 7-9 years I think this will give the best value for money.
I used to think, base rate would surely go up, but I was saying this 3 years ago, and people on low level trackers have been laughing. They could of been overpaying which more than compensate for the rates increase which realistically would be slow and by .25% a time.
Anyway, talk to resident mortgage man Sarnie, he sorted mine and my parents out and countless other PH members.
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