fied rate mortgage dilemma

busiscoming2

Hi I have a bit of a dilemma! Have applied to lender for fixed rate mortgage - Originally it was to be fixed for 3years at 5.29% with an arrangement fee of £199. As it has taken a while the mtg advisor phoned me today to offer the same rate for either 2 or 5 years and the arrangement fee will be waived. Dilemma is do we go for the 2 or 5 years!! any advice would be helpful. Mtg amount is just under £39000.

AndrewSmith

Personally 5.29% for 2 years seems uncompetitive

busiscoming2

what do you mean by uncompetitive - we have to stay with our existing lender as my husband was made redundant just before xmas and is now self employed, therefore we have no proof of income to a new lender who would probably offer a better deal.

AndrewSmith

What I mean is that there are far better 2 year fixed rate mortgages than 5.29%.

Whether you are able to go to a new lender with a more competitive mortgage depends on a number of factors, however the fact that you cannot prove income will not necessarily exclude you from better rates. What is an over-riding factor is how much mortgage in relation to the property value you are taking, and your credit history.

Also your age and type of property will come in to play.

If you post the above details it will allow me to give you a better idea of where you stand.

Andy

busiscoming2

thanks andy - think we are quite agood credit risk - no bad debts, the property is a 1960's end town house worth about £140000.

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AndrewSmith

With a 39,000 mortgage?

As long as there are no penalties for leaving the existing lender I would seriously consider looking around, or better still get a broker or advisor to look around for you.

There are 2 year fixed rates currently available almost 1% below what you have been offered (subject to suitability of course).

Andy

busiscoming2

Many thanks for you help Andy - I shall look further into this

Cheers Line

Barney088

Andy is right, there are a lot of better deals out there but you are only paying £199 fee for the one on the table, or no fee for 2 or 5 years?

With such a small mortgage it will be very hard to find a rate that will accomodate the reduced rate. Maybe a lower rate will make you £15 per month saving. Over 24 months this is a mere £360. If you get a deal where you have a fee and solicitors and valuation to add onto it I doubt that you will get anything for less than this £360. Clearly a five year rate, 60 months will be £900 savings.

There are some fee free deals out there, which may mean rates of just under 5% but they are fee free, your exisiting lender will no doubt charge you a fee for leaving, £100/£200 even if there are no penalities.

Definitly get a broker to look into it and ask them to prove that you are saving money over the next 2/3/5 years, whichever you go for.

https://www.fsa.gov.uk/Pages/register/ will get you a list of local mortgage brokers if you look.

Good luck, and I hope your husbands self employment works out.

Jay1b

I'm looking into mortgages at the moment, i've been offered several deal at 4.44% for both fixed and tracker mortgages. 5.29% is well over priced.

AndrewSmith

With Trackers there are rates below 4% available with no extended tie ins.

Andy

Jay1b

Andrew thanks.... Who that with?

4.44% was the best i could find. And thats with a 45% deposit.