Interest rate estimates - are trackers really good value?

straddie

Another thing to bear in mind with a longer term deal is that you're protected from negative equity - if you took a 2 or 3 year deal, even if rates didn't rise too high and you could afford the repayments, when the time comes to remortgage house prices could have slumped so much that even if you have a good LTV now, you might have a bad one then, which would make remortgaging difficult if not impossible, leaving you stuck on an SVR. Getting a 10 year deal means by the time you next need to remortgage you should have paid off a substantial amount of capital and there would have to be an extremely severe and sustained drop in house prices for negative equity to be an issue after 10 years of repayments! What's more, the FD is really flexible so you can also get your repayments down by overpaying or by building up savings - something most fixed deals don't allow.

We're in the process of applying for the 10 year FD fix, so far so good. Like Lisyloo says, once you make an enquiry they reserve the rate for you for 4 working days, in which time you need to ring and pay the booking fee of £399 to secure the deal for 6 months. We ummed and aahed for ages about what the best deal was but in the end we decided having peace of mind for 10 years outweighed the risk of us paying more than we would on another deal, and in any case, the flexible nature of the product means we have ways to improve the situation if rates dropped anyway.

After having spent hours scouring the mortgage market for the past few months in anticipation of this remortgage, I can't wait to be able to forget about it for 10 years!

lisyloo

f.direct fee of £798 can they add it to the mortgage or have i got to pay it up front ????

You will need to pay the £399 reservation fee up front to resevee the mortgage and a few weeks later the £99 for the valuation (which is paid to a seperate company called Independent valuations).
You can add the £399 booking fee to the mortgage.
You will also have to pay your existing lender exit fees.

Another thing to bear in mind with a longer term deal is that you're protected from negative equity

Good point and another thing is that on a 2 years deal you could find yourself out of work at the time you need to remortgage. It might be a temporary "in between jobs" situation but if it comes at the wrong time it causes problems.
You avoid the risks and fees with a long term deal.

straddie

curlyboy wrote: »

f.direct fee of £798 can they add it to the mortgage or have i got to pay it up front ???? im looking at there 6.29% fixed for 5 years thats an option as welll I will call them later im going to opt for a fixed either the 5 or 10 year with FD unless something else comes on the market in next 7 days

£399 booking fee paid up front, £399 arrangement fee added to the mortgage. If you pull out of the deal at any time before drawdown, you lose the booking fee but not the arrangement fee as you won't have paid it. If they decline your application, you get your booking fee refunded.

Also, assuming you get accepted for a deal, if they bring out a better rate before the end of Sept, you should hopefully be able to switch to it for just the loss of your booking fee ie they won't charge you 2 lots of arrangement fees. If the rate is significantly different it will probably be worth the extra fee because you'll easily make it back over 10 years. The only exception to this is if they bring out a special deal with special fees in which case there might be an additional fee to pay.

There's always the risk that somebody else brings out a better deal before Sept (in which case switching would be more expensive due to additional valuation fees etc), but First Direct tend to be pretty competitive so if rates start to drop across the board I would expect them to follow suit.

straddie

lisyloo wrote: »

You will need to pay the £399 reservation fee up front to resevee the mortgage and a few weeks later the £99 for the valuation (which is paid to a seperate company called Independent valuations).
You can add the £399 booking fee to the mortgage.
You will also have to pay your existing lender exit fees.

They actually term the fees 'booking fee' and 'arrangement fee' - you pay the booking fee up front, and the arrangement fee is added to the mortgage.

Not meaning to be picky, just wanted to avoid any confusion as they will say that the booking fee needs paying up front rather than being added to the mortgage.

straddie

lisyloo wrote: »

Good point and another thing is that on a 2 years deal you could find yourself out of work at the time you need to remortgage. It might be a temporary "in between jobs" situation but if it comes at the wrong time it causes problems.
You avoid the risks and fees with a long term deal.

Yes, and on a similar note, anybody wishing to start a family but have the mother go back to work afterwards might find their remortgage comes in the middle of maternity leave which could again cause problems when having to provide proof of income.

the_root_of_all_evil

use this link to find cheap mortgages

http://www.moneyfacts.co.uk/mortgages/bestbuys/default.aspx

i went to a broker recently and they couldnt find a better deal than what i had found at the halifax, i got the feeling that good deals are drying up fast.

imo you should get a fix and quicker the better, the deal i found had disapeared within a week, and i expect rates to go up further month by month. just my feelings.

curlyboy

i know i think all fixed rates are dissapearing very quickly i called F.Direct they are calling me tonight im going to go for the 10 yr fixed at 6.19 % ive now decided and not accepting the HSBC varible tracker @ 5.69 % its to dangerous and a worry excepting a tracker i feel thats only me

I feel prices , rates and everything is going through the roof - fixed rates going up and up only 4 weeks ago u could get a 5.99 % fixed they ahve all gone from the market its a worry i need to act fast

by the way root what deal have u excepted?????

Shrewdlywalking

Not wanting to butt in, but unless wage inflation rises sharply they are unlikely to hike interest rates too severely over the coming months – what would be the benefit? Historically, the rate we have currently is still quite low, the highs of the 90s would not have been allowed has the BoE had independence. By all means take you fixed rate and feel comfortable and secure in you future, but borrowers running scared will only make a poor situation seems much worse than it is…..Individuals need to do what they feel is best, but you just feel that there is too much scaremongering and not enough considered thought!

lisyloo

but unless wage inflation rises sharply they are unlikely to hike interest rates too severely over the coming months – what would be the benefit?

The BOE targets inflation.
So the benefit is to reduced infaltion.

However personally I'm concentrating on LENDING rates (and fees) and not BOE rates.
I think that lending rates are not likely to return to the levels of the last few years because those very low rates were based on a business model that has proven to be flawed aka sub prime crisis.

Recently rates have been going up WITHOUT BOE increases.
So I would urge people to concentrate on obtainable lending rates (and fees) and not what the BOE are doing as the connection is less direct than it used to be.

For people with Northern Rock and high LTVs, thir obtainable rate has shot up and it's nothing to do with the BOE.

Shrewdlywalking

"The BOE targets inflation.
So the benefit is to reduced infaltion."

I agree, but if the inflation that we are currently seeing is just a blip, which is likely as it is without wage inflation. Raising interest rates would not really help! As long as wage inflation is not on the rise, the storm we are entering may well be a short one!