Do I take the 2 yr fixed rate or go onto Base Rate + 1%??? Help

confused31_2

wissychraddle wrote: »

MA stated that 5 year would be more like 5% fixed rate, I think the lenders are thinking people will be making too much money from them in the long run!!!

if your house falls in price , i suspect it wont go back up within 3 or 2 years and you will be in the same situation but the interest rates will probably be higher.

it might pay you to pay 5% and go on the 5 year fixed, nationwide will give you 4.88, i would shop around and see what longer deals are out there.

Its up to you at the end of the day, you will be okay for the short term, but like i said earlier, why do you think the banks are trying to get everyone onto 2 or 3 year fixes?

confused31_2

ive just done some quick calculations you say the deal they are offering is 4.38% now ive worked this out over 25 years and your payments on 90000 would be £499.56.

You say you can have a 5 year deal at 5% your payments for 5 years would be £532 pound per month.

now i know you can get less than 5% with your equity now you have had the house valued.

remember when the 3 year deal finishes you will have to pay for another deal, so if thats another 500 pound on top of the other 500 pound you need to take that into acount aswell, if you go on the 5 year fixed in the 3 years you will pay a extra 1100 pounds, but you wont have to find and pay for another deal.

And if you think the deals in 3 years time are going to be as low has what they are now, you are kidding yourself.

2 or 3 years is not a long time at all.

paulfaz

wissychraddle wrote: »

Speaking with the MA, the surveyor valued at 120k!!

She states the deal now is 4.19% 75% LTV, fixed rate for 2 years @ £510 pm

Or a 4.34% 75% LTV, fixed rate for 3 years @ £523 pm

Obviously she is advising me of the safe route - stating that if I maintain my current mortgage and go on tracker, if house price falls I will then be ineligible for a decent rate having gone over the 75% LTV threshold and I will be back at square one!

I think I am going to go the safe route - but do I go for 2 years at lower rate or 3 years at slightly higher rate??

God, it's like Goldenballs this!?!

If you maintain your current mortgage and go on a tracker she also won't earn a penny in commission - bear this in mind when you make the decision

payless

any contray to some people's beliefs , there's a lot of mortgage advisers thats would be recommending a lot of clients ( not all , as some need/want fix security) to stay on some lenders' SVR... base plus 1 would appeal to many, although of course this forum is not the correct place to be looking at suitability for individuals on a personal basis

wissychraddle

I'm still confused with this big decision - I think 2 or 3 year fixed are a little too short but I will be paying a higher interest rate for anything more. I like the security of a fixed rate and the way it will protect my LTV. However, I have to say my house hasn't really fallen in price since I moved in 7 years ago, taking into consideration the recent valuation.

I think I need to tell the MA "get me a longer deal with a similar interest rate" or go onto the tracker. I think in two years I could be in a situation where interest rates could be through the roof (scuse the pun) and I won't benefit from a short term fixed rate.

Decisions, Decisions...

Oh to the poster who was doing the calculations,.... forgot to mention the new mortgage would be on a 23 year term.

rammy007

This is very interesting reading this we are in a similar position coming off our fixed in april too,our mortgage is for the same amount as well but the house is worth a bit more.We too are wondering what to do as well,we were thinking of going on the SVR for 6months then fixing long-term say 5 or 10 years,also have 23 years left as well so would be interested in what you decide.We are with C&G.

HangTime

wissychraddle wrote: »

my house hasn't really fallen in price since I moved in 7 years ago, taking into consideration the recent valuation.

I think I need to tell the MA "get me a longer deal with a similar interest rate" or go onto the tracker. I think in two years I could be in a situation where interest rates could be through the roof (scuse the pun) and I won't benefit from a short term fixed rate.

Well average house prices are a lot higher now than they were 7 years ago, so it'd be pretty surprising if your house had fallen in value over that period! The problem is that we are currently on a downward trend and so what is worth £120k today may only be worth say £100k in a couple of years time (figures plucked out of the air, don't read anything in to them).

Personally I think it sounds like you've come to be best decision for you, trying to get a good long-term fix, or going with the tracker. Short term fixes are 'overpriced' really (compared to products that were available a couple of years ago) when you consider the fact that you are paying more than 3% over the base rate. By the time you've factored in arrangement fees etc, you'd have to be pretty confident of there being a swathe of hefty base rate hikes over the next couple of years to save any money on a 2yr fix. Don't forget that even if the base rate was at say 4 or even 5% in 2 years time, you wouldn't have been paying that 5-6% for the whole two years, it'll have moved up in stages and will have remained below the fixed rates for a fair while.

lethal0r

im buying soon and I am either:

fixing for 4 years minimum if I can get a rate around 4.5% with a fee below £500.
tracker for 1 or 2 years.

i think if you fix for anything less than 4 years your deal is only going to better than a tracker / SVR during its last year or so.

wissychraddle

HangTime wrote: »

Well average house prices are a lot higher now than they were 7 years ago, so it'd be pretty surprising if your house had fallen in value over that period! The problem is that we are currently on a downward trend and so what is worth £120k today may only be worth say £100k in a couple of years time (figures plucked out of the air, don't read anything in to them).

Sorry should have explained myself better. I haven't noticed a period over the last 7 years where my house has fallen in value, only risen or stabilised. This is because I have had quite a few valuations over that time and at no time had the value dropped, even after it had risen.

Still confused.com on what to do, think longer term is better.