Which one would you choose?

catriona69

leopardo wrote: »

I might also get run over tomorrow or something equally bad. With respect, the thread wasn't about whether or not I should buy - I am in no doubt about that as it is a long term investment also - not a flash in the pan that will lose money without doubt over the next year that I can't recover. I'm just trying to gauge people's impressions over what they feel will happen with SVR mortgages over the 2 years compared to fixed rates.

In that case...

If you go on the SVR are you tied in for a particular period or could you go onto a fixed deal whenever you want? If it's the latter, I'd find the best SVR going and wait until the deal of the century comes along on a fxed deal (or until SVRs start going up). Whilst base rate is so low, you're much better off on the SVR than paying fees to get fixed rates which are similar to the SVR anyway.

JayZed

Since the OP didn't actually ask for opinions on whether or not he should buy a house, let's stick to the question, i.e. which mortgage deal he should choose.

Frankly, those deals are all pretty crap. Is there any way you could up your deposit to 30K (25%)? Can you withdraw equity from your other property?

leopardo_2

Spuds - I think I have a couple of weeks to get the ball rolling on the mortgage tops and I agree with what you say about any future base rate reductions not being passed on - it has to stop somewhere and those with savings are getting screwed on a monthly basis it seems.

Catriona - That was my thinking on the SVR at first as I won't be tied in at all and then go onto a fixed rate if the SVR goes up. However, my concern with this is that I expect the purchase to lose value over the next year. Decreased equity means less chance of getting a better fixed rate in future. At least if I fix it at 2 years I have a better chance (purely in my opinion!) that I would have recovered any lost equity. The dilemma is in not knowing!

Jayzed - Yep I agree, the deals aren't great but they are affordable for us at least which is the only comfort! To be honest, if we hadn't found this particular place we probably would have held off for better deals. It's difficult to borrow against my current house as there isn't much equity in it currently and it's a joint purchase so I don't really want to borrow anymore. If I could get the deposit to 30k then I would put it down tomorrow! If you had to choose between those two deals, which would you go for?

dimbo61

Why are you looking at only a 2 year fix and paying £995 fee
If you have a strong relationship and are getting married think long term
Its going to cost you £995 for a 2 year fix or a 5 year fix ! and with a little overpayment each month you will be in a much better position when you come to remortgage ( equity ) and get the best deals as LTV under 60%.
On SVR the rates can and will over the nexy 5 years go UP.
Only my thoughts !! GOOD LUCK

leopardo_2

Hi Dimbo - The two year fix isn't anything to do with a lack of faith in my relationship... unless it is some kind of sub-conscious activity going on! My only thinking on the two year fix was that rates may be more attractive in two years and 5 years is a bit long to be stuck on a rate of around 5.5% especially if better deals become available. Your thoughts match mine on the SVR - they look good now but I think they will go up just as speedily as they have gone down and that would leave my in difficulties if I don't have the equity to get a better deal.

However, I hadn't thought about fixing for 5 years... maybe I could get away with not getting married if I promise the girlfriend a 5 year fix :O)

dimbo61

Two years seem to fly in relation to mortgages unless you are looking at a 10/15 term !
Rates have never been so low and 5 years gives you the chance to repay some of the debt and increase the equity in your home ( you are only putting down 20% )
You should get under 5%
Do you change your car every 6 months ?
So why change your mortgage every 2 years !

b0rker

I will be comming out of my current deal in September. If/when I fix I will not be looking at anything under 5 years. Give the economy a wee bit of time to recover in the hope that interest rates (which I suspect will have to go quite high at some point) will have gone up and come down. Say we sit on the SVR for a few months and fix in Feb 2010. We would then be coming out of that deal in 2015. I just don't fancy paying £1000 to fix for 2 years and and to do it all again in Feb 2012 when interest rates could/should (going by the govs current actions) be high.

leopardo_2

Hey Dimbo

If I could get under 5% then I'd fix it long term. At the moment it hasn't looked that way with a 20% deposit but I'm shopping around. I'm hoping that with the likely interest rate reduction tomorrow some fixed rates may come down also especially as some backs have pulled their trackes in anticipation for what may happen tomorrow. I will be phoning Derbyshire BS today as I heard they had a fix at 4.99%.

Xinpei

Hi Leopardo, About the rates you've quoted, they don't sound too great to me as you got quite a good deposit. We have a 15% deposit and the mortgage we're applying for is 4.99% fixed for 2 years. So I would have thought you could get a better deal. Have you seen a mortgage broker? all the best with your mortgage hunt - I totally understand where you're coming from - buying a house to be happy in instead of waiting and waiting till the cows come home.....

nesssie1702

The Nationwide are offering a 5 year fixed rate at 4.88% or a 3 year fixed at 4.38% both with an arrangement fee of £995 on a 60% LTV - the rates increase if the LTV amount is higher (if you're a current customer, I think the fee is less than £300)