Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • stubrem
    • By stubrem 1st Dec 17, 3:51 PM
    • 5Posts
    • 0Thanks
    stubrem
    2 Year or 5 Year Fixed Rate
    • #1
    • 1st Dec 17, 3:51 PM
    2 Year or 5 Year Fixed Rate 1st Dec 17 at 3:51 PM
    Hi Folks,


    New on here and appreciate any feedback provided.


    My current mortgage deal is expiring and am considering whether locking in for a 2 year of 5 year fixed rate.


    What are peoples general consensus on interest rates over the next 5 years, are we better to lock in for a longer term at a slightly higher rate or gamble on a lower rate for a shorter period.


    Many Thanks


    Stuart
Page 1
    • Mortgage_Adviser
    • By Mortgage_Adviser 1st Dec 17, 4:13 PM
    • 45 Posts
    • 22 Thanks
    Mortgage_Adviser
    • #2
    • 1st Dec 17, 4:13 PM
    • #2
    • 1st Dec 17, 4:13 PM
    It is individual for every one.
    I probably would never fix a mortgage for myself for 5 years as many things can happen within that time such as change in career, divorce, majour healt issues etc than could lead to a house sale and the payment of early repayment charges.
    • Neutrinno
    • By Neutrinno 1st Dec 17, 4:18 PM
    • 151 Posts
    • 69 Thanks
    Neutrinno
    • #3
    • 1st Dec 17, 4:18 PM
    • #3
    • 1st Dec 17, 4:18 PM
    No one has a crystal ball and can tell you what is likely to happen to rates in the next 5 years.

    Are you likely to repay your mortgage/pay lump sums or move home within the next 5 years? Do you prefer to have long term stability of your payments or prefer to review it every couple of years? A 2 year fix may be cheaper now but risk it being more expensive in 2 years time when you next review.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • getmore4less
    • By getmore4less 1st Dec 17, 4:46 PM
    • 30,766 Posts
    • 18,378 Thanks
    getmore4less
    • #4
    • 1st Dec 17, 4:46 PM
    • #4
    • 1st Dec 17, 4:46 PM
    Price up 2x2y against 4years into a 5y taking account of any improvement in LTV in 2y.

    You can then work out how much rates can go up without being worse off.
    • stubrem
    • By stubrem 1st Dec 17, 5:11 PM
    • 5 Posts
    • 0 Thanks
    stubrem
    • #5
    • 1st Dec 17, 5:11 PM
    • #5
    • 1st Dec 17, 5:11 PM
    Thanks folks.


    To go into a little more depth the current situation is as follows ;




    (residential mortgage)


    c.£299,208 dr outstanding


    23y term remaining


    Capital & interest repayments



    1.49% fixed rate until 29/02/2020 (c.2y), offset savings account available, £749 arrangement fee payable to lender


    = £1,290 pm whilst fixed (variable rate, currently 3.74%, thereafter £1,620 pm, although we can look at renegotiating on expiry)


    OR


    2.14% fixed until 28/02/2023 (c.5y), offset savings account available, £749 arrangement fee payable to lender





    = £1,380 pm whilst fixed (variable rate, currently 3.74%, thereafter £1,620 pm, although we can look at renegotiating on expiry)


    Now I will be offsetting the mortgage with around 100,000 pounds from remortgaging another property I own as a BTL.


    Based upon this and the fact I am going to overpay as much as I can I am leaning towards the lower interest rate


    • getmore4less
    • By getmore4less 1st Dec 17, 6:43 PM
    • 30,766 Posts
    • 18,378 Thanks
    getmore4less
    • #6
    • 1st Dec 17, 6:43 PM
    • #6
    • 1st Dec 17, 6:43 PM
    What rate are you going to be paying on the BTL money.
    • stubrem
    • By stubrem 2nd Dec 17, 7:07 AM
    • 5 Posts
    • 0 Thanks
    stubrem
    • #7
    • 2nd Dec 17, 7:07 AM
    • #7
    • 2nd Dec 17, 7:07 AM
    (BTL mortgage)
    c.£80,000 dr outstanding, plus capital raising £62,500 to increase borrowing to £142,500 (75% of property value £190k)
    25y term
    Interest only

    2.99% fixed rate until 31/01/2020 (c.2y), no arrangement fee payable to lender

    = £356 pm whilst fixed (variable rate, currently 5.10%, thereafter £606 pm, although we can look at renegotiating on expiry)


    did think this was a little high but considering not lending fee etc. I shall receive around 750 - 800 pcm rental on this house. I will be using the surplus to pay extra funds into the residential property
    • getmore4less
    • By getmore4less 2nd Dec 17, 7:17 AM
    • 30,766 Posts
    • 18,378 Thanks
    getmore4less
    • #8
    • 2nd Dec 17, 7:17 AM
    • #8
    • 2nd Dec 17, 7:17 AM
    Borrowing money at 2.99% to invest at 1.49%

    WHY.

    Even with the tax offset you will be losing money.
    • stubrem
    • By stubrem 2nd Dec 17, 7:54 AM
    • 5 Posts
    • 0 Thanks
    stubrem
    • #9
    • 2nd Dec 17, 7:54 AM
    • #9
    • 2nd Dec 17, 7:54 AM
    hmm, you may have a point but let me clarify further.


    My main driver is to pay off my residential mortgage. I am in a well paid job at present but it means a large amount of time out of the country. In the future I want to return home on a permanent basis to my wife and child and am looking to cut my monthly expenditure to allow me to take a lower paid job


    For the let property, I currently receive 800 pcm from the tenant on a mortgage of around 475. I then require to pay tax on the excess. In addition, as I am a contractor with my own ltd company this also limits my tax efficient income.


    My high level thought was to take all my savings and put them into an offset mortgage, combine this with funds from the BTL property and drive my outstanding mortgage amount to around 150k. Then over the next xx years pay as much as I can on the residential mortgage to get my monthly mortgage payments down to a lower level.


    Really appreciate your time on this one
    • getmore4less
    • By getmore4less 2nd Dec 17, 8:04 AM
    • 30,766 Posts
    • 18,378 Thanks
    getmore4less
    Raising the mortgage won't help the income issue when you can no longer deduct the interest from the rental income..

    Have you considered gifting it to the wife.
    • stubrem
    • By stubrem 2nd Dec 17, 8:45 AM
    • 5 Posts
    • 0 Thanks
    stubrem
    apologies , gifting what to my wife - the second home ?
    • getmore4less
    • By getmore4less 2nd Dec 17, 8:49 AM
    • 30,766 Posts
    • 18,378 Thanks
    getmore4less
    Yes may make no difference if she has the same income issues withe tax position on rental income changing.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

264Posts Today

1,606Users online

Martin's Twitter