Fixed or Variable?

SuzieMum

I was just about to ask Matty why he thinks it will be 2.89% for 5 years on SVR which is not fixed?

getmore4less

lauren1983 wrote: »

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:

http://www.whatsthecost.com/mortgage.aspx

I just stick the numbers in the calculator

For some calculations you have to iterate(change one variable till the numbers are right) to get the answer you are looking for.

The trick when trying to compare deals is making sure you are doing a like for like comparisons. The two main ways are some target payment or a target amount owing at a set date.

If you press the details button you can get intermediate points to use in another calculations if you want to change the conditions

One you decide on a payment you can use the interest only version and the term no longer makes any difference to the results.

getmore4less

dimbo61 wrote: »

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.

The rate does not have to stay at 2.89% to stay ahead.

LTV is a risk but even with the fix that is an issue in 5y anyway and at least with the variable there is a good chance you will have overpaid a lot more maybe upto 8%

As I showed if the variabe rates stay low for 2 years then even if they go to 7% you are still ahead after 5years.

One factor not currently known is what the OP could afford each month this may actualy be a lot more so the risk in the payments going up is not an issue.

The OP has not said what term he is planning either not that that matters if you overpay thats why I used 25y in the calcs(any number would do) to do some examples.

matty17r

Hi,

We are looking for a 25 year mortgage but would obviously like to pay this off early by paying extra every month. We could afford more but obviously do not want to push ourselves to much.

Thanks

RobertoMoir

dimbo61 wrote: »

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.

Well this is why I made the decision I made, to go onto a fixed rate. But the other decision could be equally valid, with the right product that makes switching easy enough and doesn't have too much of a penalty (I believe some banks offer trackers with a "minimal" penalty if you switch to the bank's own fixed mortgage).

If someone goes on a variable rate / tracker right now, I'd say fair enough but watch what happens to the BOE rates carefully and be prepared to move, it isn't an option for someone who wants to 'set it and forget it' for a few years imho.

But there's no need to pour scorn on the idea and dismiss it out of hand as you appear to be.

dimbo61

Matty17 is a first time buyer taking out his first mortgage
The mortgage payment is usually the biggest expence coming out of most peoples income each month.
All the other little extras that Matty might not be thinking about will soon pop up.
Council tax, gas & elec, water bills, insurance ( contents & buildings )
Life assurance, sickness , redundancy cover mortgage protection etc
New white goods fridge/freezer, TV, washing machine, home phone, broadband, sofa,bed,food, ETC
IT goes on and on and lots of one offs that you need lawn mower,ladders,
repairs and maintence

getmore4less

dimbo61 wrote: »

Matty17 is a first time buyer taking out his first mortgage
The mortgage payment is usually the biggest expence coming out of most peoples income each month.
All the other little extras that Matty might not be thinking about will soon pop up.
Council tax, gas & elec, water bills, insurance ( contents & buildings )
Life assurance, sickness , redundancy cover mortgage protection etc
New white goods fridge/freezer, TV, washing machine, home phone, broadband, sofa,bed,food, ETC
IT goes on and on and lots of one offs that you need lawn mower,ladders,
repairs and maintence

I do not see why these effect the mortgage choice of fix or variable.

Once these are budgeted for the mortgage finances become an assesment of where you think interest rates will go.

If they have not been budgeted for then that may change the amount available to service a mortgage but the choice of type is then independant these other expences.

matty17r

Hello All,

We have decided we will apply for a 5 year fixed rate after all of your helpful comments. Natwest and RBS both have the same rate mortgages and exactly the same arrangement fee of £299. This is at a rate of 4.59% and there appear to be no hidden extras. Which one out of these 2 would people recommend and can you get any freebies thrown in at all?

Is it also easy to apply on-line for a mortgage in principle or better in branch?

Thanks for your advice in advance

dwsjarcmcd

matty17r wrote: »

Hello All,

We have decided we will apply for a 5 year fixed rate after all of your helpful comments. Natwest and RBS both have the same rate mortgages and exactly the same arrangement fee of £299. This is at a rate of 4.59% and there appear to be no hidden extras. Which one out of these 2 would people recommend and can you get any freebies thrown in at all?

Is it also easy to apply on-line for a mortgage in principle or better in branch?

Thanks for your advice in advance

NatWest are part of RBS, which is probably why they are the same. Doesn't matter if you apply in branch or online.

dimbo61

Hi matty17 you need to call Natwest about the deal
Just been on the website and it puts N/A against valuation & legals so you need to know what they mean.
Fee £299 and allow 10% overpayment each year.
08000969527 Good luck