Am I missing something?

Ringo80

Hi all,



My girlfriend and I are first time buyers and have just had an offer accepted on a 2 bed for 219k. We're in good position with a 40% deposit and a combined income of 48k a year.

We're expecting our first child so it is very important for us to keep payments low and known inititially (but repayment- we're not interested in interest only mortagages). We're looking at 3 yr fixed rates.

I've spent days trawling websites as well as speaking to a couple of brokers and the deal that stands out is First Direct's 3 year fixed offset mortgage at 4.09% (they offer a 3.89 rate but with much higher fees so the 4.09 saves us over 3 years).

It is an offset mortgage and I've looked in to this, read whats been said on this site, and the truth is it's unlikely whether the offset feature will ever genuinely benefit us in the next 3 years. Once the baby comes we'll have limited income every month and whilst we have some savings at the mo I anticipate most of it will go on furnishing the house and baby stuff (although i do plan to utilise our 0% credit cards and horde our savings for as long as possible). Whilst i know the offset is interest only, we would set up a standing order to pay capital and interest like a normal fixed rate mortgage and any savings we did make on interest would be a bonus.

That aside though, the 4.09% with only £99 fees still seems the best offer around. I can find lower rates but with higher fees which all in all end up costing us more.

This seems like a perfect deal for us- can you please tell me if I'm missing something? I'm desperate to get this decision as right as possible and would appreciate any feedback asap as I'm hoping to move on this decision on Tuesday if possible.

Thanks

dwsjarcmcd

No I don't think you are, having had a quick look at moneyfacts.co.uk, I can't see anything better. Simply view the offset facitity as a bonus if you use it, if you don't then it's still a great rate.

Good luck

David

allan673

your not missing anything, your spot on! i was the same as you last year when i got my fd mortgage.
this may interest you?
http://forums.moneysavingexpert.com/showthread.html?t=738625

im with fd, i got a 10 year fixed last year. i cant recommend them highly enough.
as the above poster says view the offset as a bonus, or you could both get salaries paid into the 1st account, as this is also offset against the mortgage.

(you get a joint current acc, and joint savings account when you open the mortgage, athough i dont have my wages paid into their current account, i have a monthly standing order from my bank paid into my first direct crrent accont to cover the mortgage)

another great feature is that it is so easy to overpay should you want to - i tend to overpay between 30 to 50 pound per month.

i set mine up from the start as full repayment style, so its exactly the same as a traditional mortgage. the customer service is fantastic too.

any questions just ask.

luckyfool

How long are you planning to be in the house for? My only concern is whether 3 years is long enough, have you considered a 4 or 5 year fixed rate? The danger with the short term fixed rate is that you are fixing it over a period where rates are likely to be relatively low and are possibly going to come out of your penalty just as rates have rocketed. You could fix for an extra year or two at very similar rates to what you have been quoted.

dimbo61

HSBC doing a 5 year fix at 4.39% fee £999

Squish_21

Woah you have a hefty deposit for a FTB!!

Sounds like a good rate you have there. If its a long term home a longer fixed period may be bettr though?!