mortgage help please

julielovesshopping

i am hoping someone can help me, i have a ten year mortgage which ends this oct. i bought an ex council house for £20k. i really want to move to a house in an area where the average house is going for £140k, mine is now valued at £100k. my husband is reluctant to get into debt for £40k, so please could you tell me if you can get a fixed rate mortgage for the life of the mortgage or is it just the first couple of years, and also if i took out the £40k for 10 years what would the repayments be. my husband would not take out a longer mortgage, he is worried that interest rates would go very high as in the 80's.what would be the best mortgage,i dont have a clue what capped means. please help.

homer_j_3

You can get 10 year fixed rates.. Whether these are the most competetive, I do not know as we cannot predict the future mortgage rates. However, if you want security in knowing what you need to pay each month and want a 10 year product then I am sure that these products will be ok for you.

I think your husbands cancerns about the 80's will obviously be eased by this product but I can honestly say that the economic factors that caused this problem are not currently around.

I would also say that it is the general opinion that we are heading for a soft landing and with the fact that you willl have approx £100k equity in your property, prices are going to plummit seriously before you experience negative equity. It is probably also key to remember that should we mirror the 80's then house prices as general will drop so whether you are in the house you are now or a different one, you will be exposed to dropping house values. You will just not have a mortgage payment to meet on your potential new property.

That said if the worst case scenario happened, would you be able to maintain the payments on this mortgage? An idea may be to look for a flexible product so you can have the option to overpay etc to reduce the term should the market start to look gloomy.

just to add - capped is basically a product that caps the amount to which the lender can charge you. If you were to get a 6% capped rate, you would never pay more than this for the period of the capped period. Should the lenders standard variable rate drop below this rate then you will benefit with the interest rate reductions.

The_Wolfman

Hi Julie

I am just in the process of getting a 10 year fixed mortgage through the Woolwich whereby the APR is 4.67%. The mortgage is flexible in that you can pay 10% of the balance in any given year and interest is calculated on a daily basis.

I never thought I would ever take out a long-term fixed deal, but this looks great. I can't see interest rates going down dramatically but the chance of them going up in todays volatile world situation does concern me. 4.67% is only 0.17% above base.

Should you wish to move the mortgage or pay it off within the 10 year term you have to pay 4% of the balance.

Your payments would be:

Repayment £416.27
Interest Only £155.08

I'm not an expert, but from a common sense point of view the base rate would have to go down to 3.17% for 4.67% which would be most banks standard variable rate.

If anyone can see a flaw in my thinking can you let me know.