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How long to fix for?
james_emma
Posts: 1 Newbie
Me and my husband are buying our first house together and are having to use the 'Own Home' homebuy scheme whereby they will contribute between 20-40% of the house price which is effectively an equity loan.
Although it's not ideal to have to use this scheme we have no other way of making it onto the property ladder.
Using this scheme we are tied to the co-operative bank for our mortgage until the loan is repaid. There is another homebuy scheme available in which you can chose from any high street bank, however the interest repayments on the loan are from year 1 as opposed to year 5 onwards. Our scheme fixes the interest repayable as follows: 0-5yrs free, 6-10yrs 1.75% and yrs 11+ 3.75% so we will always know what is payable. The other scheme is linked to the Retail Index Price +1% and will change every year. Also we have been approved on the Own Home scheme and the funding is available now, although we have been approved on the other scheme there is currently no funding until after April and even then its not guarenteed when it will become available and we have found a house that would like to purchase.
We have both agreed that as things are going to be financially 'tight' for us the next 5 years due to me being on maternity leave in the next few months and the cost of childcare until they go to school we are happy to enter into a fixed mortgage - the real question is - how long do we fix for?
The 3yr fixed rate is 5.79%, the 5yr fixed rate is 5.59% and the 10yr fixed rate is 5.69% - there is roughly £6-10 a month difference between each of the terms.
Without having a crystal ball we have no way of knowing how the interest rates are going to change over the 10 year period - so I'm guessing it comes down to how much of a gamble we want to take? realistically what are the chances of the rates being any lower at the end of 3/5/10yrs?
Any ideas or advice would be grately appreciated.
Although it's not ideal to have to use this scheme we have no other way of making it onto the property ladder.
Using this scheme we are tied to the co-operative bank for our mortgage until the loan is repaid. There is another homebuy scheme available in which you can chose from any high street bank, however the interest repayments on the loan are from year 1 as opposed to year 5 onwards. Our scheme fixes the interest repayable as follows: 0-5yrs free, 6-10yrs 1.75% and yrs 11+ 3.75% so we will always know what is payable. The other scheme is linked to the Retail Index Price +1% and will change every year. Also we have been approved on the Own Home scheme and the funding is available now, although we have been approved on the other scheme there is currently no funding until after April and even then its not guarenteed when it will become available and we have found a house that would like to purchase.
We have both agreed that as things are going to be financially 'tight' for us the next 5 years due to me being on maternity leave in the next few months and the cost of childcare until they go to school we are happy to enter into a fixed mortgage - the real question is - how long do we fix for?
The 3yr fixed rate is 5.79%, the 5yr fixed rate is 5.59% and the 10yr fixed rate is 5.69% - there is roughly £6-10 a month difference between each of the terms.
Without having a crystal ball we have no way of knowing how the interest rates are going to change over the 10 year period - so I'm guessing it comes down to how much of a gamble we want to take? realistically what are the chances of the rates being any lower at the end of 3/5/10yrs?
Any ideas or advice would be grately appreciated.
0
Comments
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I cant say what the rates will be but i know when we bought our first house we fixed it for 5 years so we could budget/buy furniture etc and redecorate. We are in rented but looking to buy our next house and i'm going for another fixed, 5yrs again.Listen to what people say, but watch what people what people do!!0
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