Fixed for 2 or 5 years

JakethePeg_2

Hi there with my first post.

My wife and I are about to sign up for a new mortgage contract which is due to end in November 08. We have found quite a reasonable one which will cost £500 to sign up with at about 6.5% (i forget the exact % figure because I'm at work and details are at home). We will also be able to pay upto £500 a month to pay more off the mortgage.

My question is do I go for the 2 year or 5 year deal.

I will try to input the correct interest rate later.

Ta
Jake

minimike2

Impossible to say based on the information you have provided im afraid.

Do you see yourself moving within the five years? Or anything likely to change in your circumstances within five years? Are you likeley to pay lump sums off the mortgage within five years? Will you need to borrow more money at any point?

The five year deal will give you longer stability and better value for money from your arrangement fee, but a higher penalty if you need to get out of the mortgage deal.

lisyloo

What are the rates what are the fees.

Bear in mind that if you work on 2 year deals that you will have to pay fees more often than with 5 or 10 year deals and this needs to be factored into your calculations.

Personally I think the economy will be in a bad way in 2 years, so I think this is a risk, and then there's the fees so I favour a longer term deal, but I'm speaking generally.

JakethePeg_2

Hi,
thanks for your input and sorry for my lack of info,

Lender = Nationwide Building Sciety
Product = 6.18% 5 or 2 year Fixed Remortgage
Fee = £600
loan Amount = £73,000.00
Term = 20 years

Option to pay upto £500 per month towards early repayment


I know this is a hard question to answer but my problem is with how the market is going to pan out and the fact that a 3 year deal is the longest I've ever signed up for. Are things going to get worse or stay the same. Or is there a possibility interest rates will fall within the next 3 to 4 years?

My wife is pushed more towrads the 5 year and I think I'm more swayed that way also.

Thanks in advance for any comments
jake

MABLE

JakethePeg wrote: »

Hi,
thanks for your input and sorry for my lack of info,

Lender = Nationwide Building Sciety
Product = 6.18% 5 or 2 year Fixed Remortgage
Fee = £600
loan Amount = £73,000.00
Term = 20 years

Option to pay upto £500 per month towards early repayment


I know this is a hard question to answer but my problem is with how the market is going to pan out and the fact that a 3 year deal is the longest I've ever signed up for. Are things going to get worse or stay the same. Or is there a possibility interest rates will fall within the next 3 to 4 years?

My wife is pushed more towrads the 5 year and I think I'm more swayed that way also.

Thanks in advance for any comments
jake

With us we went for the fixed 10 year deal at 4.89% with NW. We may gain or lose over this time but one thing we needed was stability.

This rate was taken out about 3 years ago and in our case has proved the correct decision.

Also there is talk of the bank rate going down later or early next year but the problem is there is no guarantee mortgage rates will follow.

lisyloo

Also there is talk of the bank rate going down later or early next year but the problem is there is no guarantee mortgage rates will follow.

There is a gurantee if you get a genuine BOE tracker.
You have a contract that it follows the BOE rate.

Some mortgages follow a lenders rate and in this case there is no guarantee at all.

eamon

If you are not intending to move in the next few years then go with the 5 year deal. Similary if your (and partners) jobs are fairly stable and your monthy outgoings are fairly consistent (allowing for inflation of course) then the 5 year deal imho is the way to go. This way you have a bit of certainty in your housing costs for the next 5 years. Of course interest rates may fall and you will feel cheated but they could also rise and you will breathe a sigh of relief.

Buy yourself some piece of mind, take the 5 year deal, pay down your other debts (if any) and go with your plan to overpay £500 every month.

yours

Eamon

easyfinance

I will go for 3 years ))
I will take First Direct at 5.98% fix for 3 years, it comes with free valuation and legals, and it has offset facility .... so could save money alongside your mortgage ...
Doing this you will shorten your term by several years and saving you lots of money in interest.
Eugene

UK007BullDog

easyfinance wrote: »

I will go for 3 years ))
I will take First Direct at 5.98% fix for 3 years, it comes with free valuation and legals, and it has offset facility .... so could save money alongside your mortgage ...
Doing this you will shorten your term by several years and saving you lots of money in interest.
Eugene

Offset..... Hrrrump.....

Only good for those who really have lots of money to put away. They say one can pay off the mortgage early, unless you are very disciplined it could turn out to be a mistake as some people do not use it to pay off the mortgage but then always dip in to buy stuff like cars, holidays, new furniture. People should stick their extra cash into tax free vehicles first of all like ISA's, then look at offsets.

I would go for a 5 or 10 year fix if you know you have no plans to move away. You can port the mortgage, take it with you to a new property, if the lender likes the property and the LTV is OK.

The mortgage market is still going to be pants for the next 3 to 4 years. At first I thought it will sort itself out in the next 2 years but now I believe it will take longer. Dont believe the hype of property prices going up 25% in the next 2 years, what a load of cobwallow....

The main question is can you pay £500 or more or less?

JakethePeg_2

Many thanks for all the replies.

It seems that most of you would go with the longer term of 5 years. I suppose it does seem like safest option, if we can afford it, which we can.
I just wondered if any one had any views to interest rates dropping over 1% within 3 years, but then none of us are fortune tellers I suppose.

We have worked out that our monthly payments are going to be about £80 more a month when our existing deal comes to an end in November. I'm also very keen on being able to repay extra from the mortgage which I think we will also be able to afford every so often.

Anyway always good to get advice and tips from other people, many thanks.
Jake

allan673

first direct is worth a look, fixed rate offset mortgage.

then set the monthly payments up for both capital and interest so its exactly the same as a traditional repayment mortgage.

im with them and cant rate it highly enough.