A Few Questions For The Experts!

jackster109

Hi guys

Im looking to get my first mortgage and have a couple of questions:

1. After a fixed deal has ended, if I was to switch or open up a new mortgage deal, how much would this have to be?

eg. Lets say I had a 3 year fixed rate mortgate of £50,000 and had to repay back £80,000 with the interest. If I have paid off say £25,000 in the 3 years, would I then have to take out a new mortgate of £55,000 or would it be less because I would be settling the deal early and there would be less interest to pay?

2. I am thinking of getting either a 5 year fixed or a 10 year fixed over 25 years. What would you guys go for? I a bit worried that within 5 years the interest rates might shoot back up.

I like to know how much I have to pay each month, so I can then put some money away each week to cover the mortgage at the end of the month.

3. Will I be doing any harm by getting some "Agreement in Principles" from different lenders and then choosing the best option?

4. Is it likely that there may be some better fixed rate deals available next month due to the latest interest rate drop, early this month?


Thanks guys

Jackster :j

beecher

Ignore how much you'd have to pay back over the 25 years. If you have a mortgage of £50,000 work out how much capital you'll have paid off after 3 years. Subtract it from £50,000 and that's the amount your outstanding mortgage would be - your statements tell you the exact amount.

If your happy with fixing for 10 years then go for it - it is a bit too long for me personally as so much can happen over that length of time, but if is up to you. Was your original term 25 years? 'Normally' you would try to keep to that term so your next term would be 22 years or so.

Whether there are better fixed rate deals over the next little while probably depends on your LTV. If it is low, then they probably will, if it is high they probably won't. (All just my opinion)

I'd go to an adviser rather than getting multiple Agreement in Principle. They'll be able to explain how it all works, and advise you better.

herbiesjp

1) MOrtgage interest is not front loaded i.e. not added to the capital amount borrowed at the outset. You only pay the interest for the time you have the mortgage. So your example is wrong. If you started with a £50k mortgage, when you came to re-mortgage the balance would be less than £50k (assuming a repayment mortgage)

2) Personally I think 5 years is as long as I would want to fix, as rates will go up and down in cycles. Plus fixing for 10 years might not suit me due to changes in personal circumstances

3) Getting a couple would be ok - getting loads will lower your score. In all honesty just get one, and if that comes back ok you should be fine with other lenders. Also because rates are constantly changing and the lender you get the AIP with today, may not be the one who offer you the best rate when you come to purchase.

4) Million dollar questions - although got an email this morning saying Natiowide was increasing some fixed rates