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  • FIRST POST
    • superbez
    • By superbez 17th Jul 17, 2:56 AM
    • 23Posts
    • 4Thanks
    superbez
    First mortgage
    • #1
    • 17th Jul 17, 2:56 AM
    First mortgage 17th Jul 17 at 2:56 AM
    Hi

    Finally in a position to buy our first home, we have the deposit, are now debt free and have a mortgage agreed in principle. I am interested to hear what people suggest we go for as total novices? I like the idea of a fixed mortgage as I am keen on knowing what I will pay regardless of what happens to the markets. With Brexit around the corner we had kind of settled on a 5 year fixed for security but the mortgage advisors we have spoken too both suggested 2 year fixed which is what the AIP is based on. I really have no idea on what I should be doing which is a little scary seeing as we are about to commit to the biggest financial outlay of our entire lives.

    Any advice would be very much welcomed!

    Many thanks
Page 1
    • juniordoc
    • By juniordoc 17th Jul 17, 10:10 AM
    • 113 Posts
    • 66 Thanks
    juniordoc
    • #2
    • 17th Jul 17, 10:10 AM
    • #2
    • 17th Jul 17, 10:10 AM
    In trying to make this decision you are basically trying to decide how interest rates are going to change in the next 2-5 years.
    It's a gamble, and no'one can give you any certainty.
    Personally, I think that all the brexit uncertainty and poor economic performance in the UK will put downwards pressure on interest rates keeping them low.
    Therefore in my opinion, it's not worth paying a higher mortgage rate to fix your payments for 5 years, when (in my opinion) I don't think interest rates will be much higher in 2 years time anyway.
    So if I were you, i'd go for the 2 year fix, and try and raise as big a deposit as you can to protect against negative equity if prices fall.
    Now is a very risky time to buy with only a 5 or 10% deposit. Remember that's just my opinion, good luck with whatever you decide!
    • DumbMuscle
    • By DumbMuscle 17th Jul 17, 10:20 AM
    • 196 Posts
    • 287 Thanks
    DumbMuscle
    • #3
    • 17th Jul 17, 10:20 AM
    • #3
    • 17th Jul 17, 10:20 AM
    Interest rates are unlikely to go significantly lower than they are now. What are the fees on the 2 year fix, and how much are you borrowing? When I looked at it (borrowing £150k), it was about the same to go for the 5 year fix than it would be to get two 2 year fixes, since what I was saving in interest would have been cancelled out by the fees.

    Are you likely to have any major financial changes in the next 5 years? (e.g. promotions, maternity leave). Work out what effect those would have on the mortgage deals you could get - this may make a difference to when you want to remortgage
    • hazyjo
    • By hazyjo 17th Jul 17, 10:55 AM
    • 9,177 Posts
    • 11,542 Thanks
    hazyjo
    • #4
    • 17th Jul 17, 10:55 AM
    • #4
    • 17th Jul 17, 10:55 AM
    I've decided on a 3 year fix. Two years go past very quickly and it may well clash with any Brexit plans, 5 years seems long to me (I've often moved within that time), and 3 years (this time round) seemed about right. I've usually gone for 2 years.


    Jx
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies)
    • superbez
    • By superbez 18th Jul 17, 4:49 PM
    • 23 Posts
    • 4 Thanks
    superbez
    • #5
    • 18th Jul 17, 4:49 PM
    • #5
    • 18th Jul 17, 4:49 PM
    In trying to make this decision you are basically trying to decide how interest rates are going to change in the next 2-5 years.
    It's a gamble, and no'one can give you any certainty.
    Personally, I think that all the brexit uncertainty and poor economic performance in the UK will put downwards pressure on interest rates keeping them low.
    Therefore in my opinion, it's not worth paying a higher mortgage rate to fix your payments for 5 years, when (in my opinion) I don't think interest rates will be much higher in 2 years time anyway.
    So if I were you, i'd go for the 2 year fix, and try and raise as big a deposit as you can to protect against negative equity if prices fall.
    Now is a very risky time to buy with only a 5 or 10% deposit. Remember that's just my opinion, good luck with whatever you decide!
    Originally posted by juniordoc

    We are fortunate enough to have large deposit which has come from the inheritance of a property. Long story short, we live in the south east, the property we are looking at is £350k and we have deposit of £180k.

    I really do appreciate everyone's responses to my question, thanks!
    • superbez
    • By superbez 18th Jul 17, 4:53 PM
    • 23 Posts
    • 4 Thanks
    superbez
    • #6
    • 18th Jul 17, 4:53 PM
    • #6
    • 18th Jul 17, 4:53 PM
    Interest rates are unlikely to go significantly lower than they are now. What are the fees on the 2 year fix, and how much are you borrowing? When I looked at it (borrowing £150k), it was about the same to go for the 5 year fix than it would be to get two 2 year fixes, since what I was saving in interest would have been cancelled out by the fees.

    Are you likely to have any major financial changes in the next 5 years? (e.g. promotions, maternity leave). Work out what effect those would have on the mortgage deals you could get - this may make a difference to when you want to remortgage
    Originally posted by DumbMuscle
    See above for borrowing, also have a little left over to hopefully do a single story extension which would be completed if I went for a 2 year fix so when it came to remortgaging I would hope that the extension would add value to the property.
    • superbez
    • By superbez 18th Jul 17, 4:54 PM
    • 23 Posts
    • 4 Thanks
    superbez
    • #7
    • 18th Jul 17, 4:54 PM
    • #7
    • 18th Jul 17, 4:54 PM
    I've decided on a 3 year fix. Two years go past very quickly and it may well clash with any Brexit plans, 5 years seems long to me (I've often moved within that time), and 3 years (this time round) seemed about right. I've usually gone for 2 years.


    Jx
    Originally posted by hazyjo
    Interesting, I hadn't thought of 3 years, I may well look into that!

    Many thanks.
    • DumbMuscle
    • By DumbMuscle 18th Jul 17, 4:59 PM
    • 196 Posts
    • 287 Thanks
    DumbMuscle
    • #8
    • 18th Jul 17, 4:59 PM
    • #8
    • 18th Jul 17, 4:59 PM
    See above for borrowing, also have a little left over to hopefully do a single story extension which would be completed if I went for a 2 year fix so when it came to remortgaging I would hope that the extension would add value to the property.
    Originally posted by superbez
    You're already at around 50% LTV, so adding more value to the property is not going to make a significant difference to your rate (anything below 60% will get the best deals)
    • hazyjo
    • By hazyjo 18th Jul 17, 5:26 PM
    • 9,177 Posts
    • 11,542 Thanks
    hazyjo
    • #9
    • 18th Jul 17, 5:26 PM
    • #9
    • 18th Jul 17, 5:26 PM
    YBS have always been a very good option for me. Worth checking out their 3 year fixed rate cashback deal. Of course, you may find better, but they sometimes get forgotten.
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies)
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