mortgage deal for 3y or 5y??

cliveclivo

Hiya. I could do with a bit of advice at the moment. Been biting on my nails worrying too much....:o

I currently have a mortgage offer secured for 3y tracker at 6,3%. I'm a bit worried now that in 3y time I might be in negative equity and won't be able to remortgage.
I'm paying £60.000 deposit on a £340.000 property in central London. My mortgage broker advised me again that it's in my best interest to stay on the 3y rather than switching to a 5y deal. He believes with being in £60.000 in equity on a London flat and that prices really have to go through the floor for me to be in negative. Also he says my current lender Halifax is good looking after existing customers and that they'll give me a good deal at the end of the 3y deal. He says it's better than to tie myself on for 5y.

Any opinions on this??

cheers!

andrewmp

cliveclivo wrote: »

Hiya. I could do with a bit of advice at the moment. Been biting on my nails worrying too much....:o

I currently have a mortgage offer secured for 3y tracker at 6,3%. I'm a bit worried now that in 3y time I might be in negative equity and won't be able to remortgage.
I'm paying £60.000 deposit on a £340.000 property in central London. My mortgage broker advised me again that it's in my best interest to stay on the 3y rather than switching to a 5y deal. He believes with being in £60.000 in equity on a London flat and that prices really have to go through the floor for me to be in negative. Also he says my current lender Halifax is good looking after existing customers and that they'll give me a good deal at the end of the 3y deal. He says it's better than to tie myself on for 5y.

Any opinions on this??

cheers!

I'd say get a new financial advisor. Can't you fix long long term? I recently fixed for 25 years.

neverdespairgirl

cliveclivo wrote: »

He believes with being in £60.000 in equity on a London flat and that prices really have to go through the floor for me to be in negative.

It would take a 17% drop to wipe out the equity - which is quite possible, I think.

cliveclivo

andrewmp wrote: »

I'd say get a new financial advisor. Can't you fix long long term? I recently fixed for 25 years.

Hi thanks for your post.

cliveclivo

neverdespairgirl wrote: »

It would take a 17% drop to wipe out the equity - which is quite possible, I think.

thanks!
The property came down in price twice before I offered another 10% below the asking price. It has gone down a lot already and there is speculation it might drop a bit more for the next few years before it goes up again.

mlz1413

Is your wage likely to go up more than % pa? If not go for long term fixed, if yes then the rate is so much of an issue.

Are you likely to move in next 3, 4, 5 years? If so then go for lowest term unless it is fully portable.

I'm same as andrewp fixed for 25 years as I'm sure I will live in current house for next 7-10 years, I can over pay a monthly amount and its portable. Worst case sernario is a 3% redemption. But 10 years ago I wouldn't have dreamt of this commitment as I wasn't settled in my job or life.

andrewmp

mlz1413 wrote: »

Is your wage likely to go up more than % pa? If not go for long term fixed, if yes then the rate is so much of an issue.

Are you likely to move in next 3, 4, 5 years? If so then go for lowest term unless it is fully portable.

I'm same as andrewp fixed for 25 years as I'm sure I will live in current house for next 7-10 years, I can over pay a monthly amount and its portable. Worst case sernario is a 3% redemption. But 10 years ago I wouldn't have dreamt of this commitment as I wasn't settled in my job or life.

Sounds like me and you have the same deal.

space_rider

I took on a 2 year tracker which is due to end in December. I am looking at remortgages at the moment and I have had a valuation by Halifax and I have lost 30,000 in around 18 months. I live in the East Midlands and prices have been dropping for a while now. I`m sure London prices will go down too.

andrewmp

space_rider wrote: »

I took on a 2 year tracker which is due to end in December. I am looking at remortgages at the moment and I have had a valuation by Halifax and I have lost 30,000 in around 18 months. I live in the East Midlands and prices have been dropping for a while now. I`m sure London prices will go down too.

Especially a flat, I don't know why his financial advisor is giving out such crap advice.

dander

I would have thought that with a tracker there is far less advantage to fixing for long periods. As the standard variable goes up and down over the years, your rate will too, so you're never going to get that mammoth bump when your low rate finishes and you return to find the variable has skyrocketed.

The big thing to consider is how likely you are to want to get out of your mortgage deal before the time is up. You see posters on here all the time, who due to jobs, relationships etc find they need to sell soon after they bought and huge redemption fees are making life even more difficult than it already would be in this market.

mlz1413

andrewmp wrote: »

Sounds like me and you have the same deal.

Think we must be as it's the only 25 yr deal I found, are your with the little known KRBS too?