5 year fixed?!?

dave82_2

Hi,

We are considering taking a 5 year fixed deal at 85% LTV. The interest rates aren't great 5.99% but we like the idea of knowing what we are paying.

What is everyones thoughts on this?

The other big worry is that they same to ahve a 4% early redemption charge. We sould prefer one that tapers down e.g. 5% first year 4% second .... 1% last year. This would mean in the last year we could start looking at another fixed deal if interest rates are starting to go up.

Cheers D

dave82_2

Opps Sorry wrong forum could this be moved to the mortgage section?

Cheers

getmore4less

Is this a remortgage?

dave82_2

First time buyer.

Sweetcaz_2

I have recently taken out a 5 year fixed. I know trackers are cheaper at the moment and may well be for a couple of years yet but my husband and I are borrowing right at the limit of what we feel we can compfirtably afford to pay each month and do not want to risk having to pay a penny more!

If you are worried about the 4% redemption penalty throughout I would shop around and see what other offers are out there. Bear in mind if you were to move though and borrowed more you may have the option to port the mortgage so the redmeption fee would not be so much of a worry to you maybe?

dave82_2

Thanks for the advise. The trackers aren't much better at 85% LTV to be honest! I just wish I could see the future!

The main issue we have with the 4% redemption is being able to shop around in our last year of the mortgage. Wouldn't mind doing this on say 1-2% but 4% is a steep price to pay!

mlz1413

Most mortgages allowing porting, so if you do move in the last year or two you can take the mortgage with you as long as you still fit the critera.

dave82_2

I understand I can port it but consider the following situation.

I am fixed at 5.99% in my final year. In this final year other lenders availiable fixed rate deals are at 4% but inerest rates are starting to rise. To switch onto the 4% deal I would have to pay the 4% get out or wait till the end of my term when fixed rate deals might be at 8%.

The figures are just for illustration.

Sweetcaz_2

dave82 wrote: »

I understand I can port it but consider the following situation.

I am fixed at 5.99% in my final year. In this final year other lenders availiable fixed rate deals are at 4% but inerest rates are starting to rise. To switch onto the 4% deal I would have to pay the 4% get out or wait till the end of my term when fixed rate deals might be at 8%.

The figures are just for illustration.

In this case it may be worth paying the 4% to get out of the 5.99% as you are going to potentially save 4% per annum on your new fixed term?

mlz1413

dave82 wrote: »

I understand I can port it but consider the following situation.

I am fixed at 5.99% in my final year. In this final year other lenders availiable fixed rate deals are at 4% but inerest rates are starting to rise. To switch onto the 4% deal I would have to pay the 4% get out or wait till the end of my term when fixed rate deals might be at 8%.

The figures are just for illustration.

a) you are taking out a fixed for 5 yrs so there is always going to be a redemption.

b) you haven't taken arrangement fees into consideration, the 4% might charge £1999 for 2 yr fixed the 8% might be fees free for 5 year fixed.

c) no one knows for sure what will happen and you could always stay on SVR without tie in's.

Are there any 3 year deals at 85% LTV? sounds like you would be best committing for a slight shorter term.

dave82_2

Only it would be imposible to predict that rates would rise to 8% so paying the 4% would be a big gamble! Where as if you were paying say 1% in the final year it wouldn't be so bad!