2 mortgage deals - can't decide??

Ian_Griffiths_Halifax

Gorgeous_George wrote: »

I think three years is pointless.

Yes, it earns more commission for brokers so I understand why they get recommended - but three years passes so quickly. You will soon be going through the stress of remortgaging yet again.

As recession kicks in, I think interest rates will fall in the short term so fixing now is not a good idea unless you cannot take any risk at all.

Fix for ten years if available or five at a push but three years, I wouldn't bother.

GG

Three year rates exist because people want and need them.

Having said that, I always tell my clients to consider the fact that if they take 2 or 3 year deal after 2 or 3 year deal on an ongoing basis, then with the costs often involved, they may not be getting anywhere.

Only very recently (the last week or so) have half decent 5 year Fixed rates returned after being quite high for around 8 months.

Locoblade

getmore4less wrote: »

Thats one of the points you manage you repayment schedule and can decide what your term ends up being when you make the capital payments, start at 17 and you have to ask the lender to extend, start with repayment and you have to ask the lender to switch to interest only.

Start with the longest term and interest only with a deal that allows overpayments at least as much as the repayment would be and watch for tie ins and you are in control.

Yup, what I was getting at though really is, whats the likelyhood of being on that same deal in 17 years for outright mortgage length to be a concern? If thats unlikely then it doesn't matter whether you go for 17 or 25 years as long as it has the option to drop to interest only and you can overpay substantial amounts, because the minimum payment will be the same regardless.

We've got a larger loan but am currently planning to go with the FD +0.99% offset lifetime tracker with no fees, no early redemption and no tie in, with a minimum payment being interest only. As you say, with an offset you can use savings and look at stoozing etc to raise more capital to offset with, so even with a larger loan its worth considering I think.

Gorgeous_George

Ian_Griffiths_Halifax wrote: »

There's more to life than paying a mortgage.

I'll second that!

There's water rates, council rates 'n' road tax
House insurance car insurance - the poll tax
There's school fees the birds and bees a leccy bill
The weekly shop a speeding cop and the gas bill

and there's more.



GG

Ian_Griffiths_Halifax

Gorgeous_George wrote: »

I'll second that!

There's water rates, council rates 'n' road tax
House insurance car insurance - the poll tax
There's school fees the birds and bees a leccy bill
The weekly shop a speeding cop and the gas bill

and there's more.



GG

And the best things in life are free.

getmore4less

Locoblade wrote: »

Yup, what I was getting at though really is, whats the likelyhood of being on that same deal in 17 years for outright mortgage length to be a concern? If thats unlikely then it doesn't matter whether you go for 17 or 25 years as long as it has the option to drop to interest only and you can overpay substantial amounts, because the minimum payment will be the same regardless.

We've got a larger loan but am currently planning to go with the FD +0.99% offset lifetime tracker with no fees, no early redemption and no tie in, with a minimum payment being interest only. As you say, with an offset you can use savings and look at stoozing etc to raise more capital to offset with, so even with a larger loan its worth considering I think.

Well I think there have been some long term tracker deals that would be hard to better and if portable you would never want/need to change while you still need to borow ours is a base+0.95 and I seem to recall some long term tracker rates down as low as base+0.2 or less with offsets not that much more.

One other advantage of staying on interest only these days and saving is it can be easier to move up the ladder since you may not have to increase your lending.

For those that want the simple life and have some control over their spending an offset is the way to go, pay all your money into the offset and spend as little as possible easy one stop shop and NO more mortgage change wories.

These days offsets are a small premium over the best deal trackers.

tomstickland

getmore4less wrote: »

With time limited loans you have to do the measuremnets over the short term and as I have shown the fees make a significant difference (even small ones like these) on smallish loans (<£100k).

If you pay fees up front you have to compare the no fee options by borrowing less.

Yes, my analysis was properly closed and looked over the 2 or 3 year fix period.

If the fees were lower than the max then the difference was put into a savings account for the time period.
If the monthly payments were lower than the max then the saved money was also put into the savings account.

I looked to see which mortgage was the most efficient, ie: payed the most amount of loan off over the time period.

A lower rate with higher fees tended to give better results, though once the fees became really high then this was no longer true.

Locoblade

getmore4less wrote: »

These days offsets are a small premium over the best deal trackers.

Yup, if any premium at all (thinking FD current offers).

getmore4less

tomstickland wrote: »

Yes, my analysis was properly closed and looked over the 2 or 3 year fix period.

If the fees were lower than the max then the difference was put into a savings account for the time period.
If the monthly payments were lower than the max then the saved money was also put into the savings account.

I looked to see which mortgage was the most efficient, ie: payed the most amount of loan off over the time period.

A lower rate with higher fees tended to give better results, though once the fees became really high then this was no longer true.

I think you should use the same same starting point so rather than putting the fees into savings borrow less on the other options(s). then make all the payments the same or the end points the same net debt

Using a savings account with a lower net rate than the mortage will distort the comparison in favour of the fee paying loans. because on the non fee paying loans you are effectivly borrowing the fees at the mortgage rate to save at the savings rate.

tomstickland

If the rates are made the same then it makes no difference. This is because a mortgage can be treated as a debt and a savings account that happen to balance out by the end of the term.

Obviously it depends on what you are trying to do. In my case I was modelling my plans and that involved saving any excess funds. The results showed that a few tenths of a percent on rate were worth having for a a fee up to £1000.