Fixed or Variable?

matty17r

Hello All,

I am a first time buyer with a 25% deposit on a 170,000 house. What do you think are the best options in terms of getting a mortgage? Is fixed or variable likely to be the best. Ideally we be looking to re-mortgage the property after 5 years as better rates may come along.

Does anyone know of any good deals around as the best we have is 4.99% fixed for 5 years or 2.89% variable for the same time period.

Thanks in advance for your help

Matt

SuzieMum

Can I just ask what is the fee on the 2.79% variable one?
I think you could get better than 4.99 fixed for 5 yrs....that seems a long time, I'd stick with 1 or 2yrs.
Also do you know yet if any of the lenders have reduced rates in line with this weeks interest rate drop? We are waiting for ours to hopefully drop so we can fix for another couple of years as we have just come out of a 5yr fixed and now on to standard variable (which I like as it's lower but I don't like as I'm scared of rates going up!).

getmore4less

Why not take the variable and pay the same as the fix would have been.

Need the fees to make the following more accurate

Crunch the numbers over 1,2,3,4,5 years and see what the rate would have to go upto to be worse off.


Say you took the fix on £130k over 25y. that would be £751pm and after two years you would have £124,406.85 outstanding

The variable would be £603pm

If you paid the same as the fix after two years you would have £118,937.07 outstanding a saving of £5500.

From that point to end up no worse than the fix in another 3 years which would have £118,510.56 outstanding the variable rate would have to stay below 7.45%.

The one year number is 6.16%

Those early overpayments can help a lot and make trackers seriously good deals not to be overlooked.

Robert_Sterling_3

Nobody know which will be the best so make your own call.

SuzieMum

Getmore4less thats a brilliant way of thinking thank you!!

matty17r

Hi,

The variable rate is with First Direct and is 2.89 per cent. The fee is 799 pounds. I have just found a 5 year fixed with Royal Bank of Scotland / Natwest at 4.59 per cent and the fee is 299 pounds.

Any thoughts as to what you think will be the cheapest will be appreciated.

Thanks

RobertoMoir

matty17r wrote: »

Hello All,

I am a first time buyer with a 25% deposit on a 170,000 house. What do you think are the best options in terms of getting a mortgage? Is fixed or variable likely to be the best. Ideally we be looking to re-mortgage the property after 5 years as better rates may come along.

Does anyone know of any good deals around as the best we have is 4.99% fixed for 5 years or 2.89% variable for the same time period.

Thanks in advance for your help

Matt

As you know already, this isn't about right or wrong, its about preference. I'm fixing to sign up to a 7 year fixed deal at about 4.84% through C&G because of how I think interest rates might go within that time frame. I could totally be wrong, though, but whatever happens I know what my repayment will be for a good length of time which puts me in a strong position in one sense even if it means I'm paying more than I would with a tracker right now. You pays your money and you takes your choice I guess.

Obviously you can afford both options, so I like the idea of taking the variable and overpaying by the difference between that and the fixed, if that works for you.

feisty1

the exact reverse advice you gave yrself!!

getmore4less

matty17r wrote: »

Hi,

The variable rate is with First Direct and is 2.89 per cent. The fee is 799 pounds. I have just found a 5 year fixed with Royal Bank of Scotland / Natwest at 4.59 per cent and the fee is 299 pounds.

Any thoughts as to what you think will be the cheapest will be appreciated.

Thanks

OK lets say you pay the £299 fee up front and add £500(799-299) to the variable loan
25year repayment term
£13o000k @ 4.59 £729.24 round to £730 after 5years £114,336.06 outanding.
£130500k @ 2.89 paying £730pm after 5years £103,699.75 outstanding

You get ahead of the fix after 3 monhs.

The varable is clearly the cheapest as long as rates stay below the fixed rate and the longer they do the more you save.

If rates rocket up you could get caught out but you should be able to fix before the payments reach your limit.

lauren1983

getmore4less wrote: »

OK lets say you pay the £299 fee up front and add £500(799-299) to the variable loan
25year repayment term
£13o000k @ 4.59 £729.24 round to £730 after 5years £114,336.06 outanding.
£130500k @ 2.89 paying £730pm after 5years £103,699.75 outstanding

You get ahead of the fix after 3 monhs.

The varable is clearly the cheapest as long as rates stay below the fixed rate and the longer they do the more you save.

If rates rocket up you could get caught out but you should be able to fix before the payments reach your limit.

This is realy interesting. Though im no maths wiz so would you mind telling me how you calculate it as id like to do abit of number crunching before taking out my next mortgage!!

Thanks :beer:

dimbo61

So you honestly think that the op will have a variable rate of 2.89% for the next 5 years !!!
I will run Naked round the TOWER OF LONDON if that happens
You are putting down a 25% deposit so taking out a £130,000 mortgage over 25 years and people are saying go on a variable rate now !
What happens if the lender you go with will not offer you a good fix in 2 years because your LTV have dropped with the falling market and the SVR climbs to 7/8/9%
You need a long term fix and you want 5 years to get some of the mortgage paid off ( overpay if you can )
You need security not the cheapest rate this month its your home you are gambling with .
The BOE rate has gone from 5% to 1% in a few months who is to say in will not rise as quickly.