FTB Mortgage - How long would you fix for?

lsv

Just having a look at mortgage deals. As a FTB, I intend on going for a fixed rate mortgage, the issue is, I have no idea how long to fix for. Incidently I'm looking at 90% LTV products which are around 6.x% interest.

The overly cautious part of me is edging towards 5 year fixed deals obviously giving me peace of mind for the next five years. However, I'm also torn in the direction of 2 year deals - my reasoning being that I would expect more deals to be available in 2 years time as banks (hopefully) become more open to lending again. I am clueless as to where interest rates will be within two years but I suspect they may be higher that at this point. However I would expect that at that, as someone renewing their mortgage, I would be eligable for a lower %age than a FTB. Is the logic flawed?

I'm interested to see what others would do if in my position. Alternatively, if you have a crystal ball...;)

Cat695

I will be fixing for 10 years for peace of mind....however with the deposit I have gives me around 40% deposit (depending on what house I choose) so I will be below 5% interest

I believe (as in me and me alone) rates will shoot up in the next couple of years to double figures....in which case you could come out of a fixed of 6% onto 10% for example and I don't fancy that

also I will be getting around 55k in 5 years (from the Army when I retire) and I'm sticking that in savings till the remaining 5years is up so hopefully I will become mortgage free

barnaby-bear

lsv wrote: »

Just having a look at mortgage deals. As a FTB, I intend on going for a fixed rate mortgage, the issue is, I have no idea how long to fix for. Incidently I'm looking at 90% LTV products which are around 6.x% interest.

The overly cautious part of me is edging towards 5 year fixed deals obviously giving me peace of mind for the next five years. However, I'm also torn in the direction of 2 year deals - my reasoning being that I would expect more deals to be available in 2 years time as banks (hopefully) become more open to lending again. I am clueless as to where interest rates will be within two years but I suspect they may be higher that at this point. However I would expect that at that, as someone renewing their mortgage, I would be eligable for a lower %age than a FTB. Is the logic flawed?

I'm interested to see what others would do if in my position. Alternatively, if you have a crystal ball...;)

There are a lot of tempters for FTB - if you catch 'em young, you keep a certain % through apathy or inability to move.... generally people got better offers renewing because high HPI meant a lower LTV in a few years... divide the fees for fixing over the years of the fix - high fees can negate a lower % rate. Look at the portability - will you want to move in 5 years - many portable products aren't really in practice. Can you overpay / do you have a comfort zone/safety net etc.... can you afford to buy out any negative equity....

patch3228

I would like to fix for 10 years but those deals are reserved for the lucky ones with 60% LTV ... prob aiming for 5 years

I think Nationwide BS were reserving some good-ish deals for existing customers coming to the end of their mortgage period so I guess in some instances you would be eligible for a lower %age (especially as your LTV ratio would have fallen by then)

lsv

I would have a fairly decent safety net at 90% LTV but could move to 85% products. However, my instinct tells me to have a bit of cash around as an emergency fund (hence the 90% products).

Would be looking at products I can overpay. Is portability an issue, presumably if I was looking at a bigger (and logically, more expensive) property in the future, the current lender would just reasses the mortgage and lend if my salary could cover the repayments?

patch3228

Yeah good idea, keep a cash flow for peace of mind (home emergency and current job climate) - Martin mentioned having a contingency fund worth covering 6 months of mortgage payments (not gospel but pretty good advice).

Majority of products I have looked at allow overpayments of up to 10% per month without incurring fine.