First time buyer with 40% deposit - which mortgage?

kjazz_uk

Hi,

Me and my partner are buying our first home and are in a lucky position to have 40% deposit.

Originally we have been looking at a fixed rate 2/3 year with a repayment of around £500 per month. So far the best deals seem to be with First Direct and Northern Rock (anyone have experience of using either?)

Is fixed rate the best way to go in the current climate? Any predications on what the BOE will do?

Appreciate any advice

Thanks

tomthelondoner

At 40% deposit, as long as the affordability is not an issue, you have good credit history and good employment history, you can access fantastic rates, both fixed and trackers. Given the fact that you can get fixed rates well below 4% with 40% deposit I personally would pick a low fixed over a tracker, but at the end of the day it depends on your attitude towards risk. Tracker rates seem to have high margins these days - BoE +2% or higher (there's one very low stepped tracker available, BoE + 1.48% in the first year, BoE + 2.48% for the remainder of the term), meaning that if the BoE returns to 3-4% people on trackers will be paying a lot more. As a comparison, my manager has two buy-to-lets she bought a while ago on tracker mortgage BoE-0.50%; she collects the rent and does not pay a penny in mortgage!!! Low (below 4%) fixed may be a better option, depending on the fees and the size of your mortgage - you will not lose any sleep every time the Monetary Policy Committee holds a meeting, at least for as long as your rate is fixed...

dimbo61

The 3 year fix from first direct at 4.39% looks a good deal with £199 arrangement fee.
Check if its an offset mortgage which also gives you more flexiability!

kjazz_uk

Would you go for the 3yr fixed (4.39%) rather than the 2yr fixed (3.69%)?

They are offset too , which I assume they offset to what you have saved with them?