5 year fixed?!?

dave82_2

Sorry this is a repost as I posted in the wrong forum.

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

Wutang_2

Its up to you - although if you speak to a whole of marketer, they might be able to do the search for you and specify a product to suit your needs...

If (due to LTV) you are restricted, then you could just chill for now and possibly take advantage of reduced SVR? All depends on who you are with etc....

mortgage-adviser-now

That sounds like our friends at Coventry B S.

5.99% is the going rate.

If you are not confident you can go 5 years without redeeming the mortgage dont get a 5 year rate.

dave82_2

I am confident that I will stay in the property for 5 years and like the securty of knowing what I am paying. The issue is that I would like to shop around in the last year of the mortgage in which rates could be rising and I would be stuck unless I pay 4% that is!

mortgage-adviser-now

dave82 wrote: »

I am confident that I will stay in the property for 5 years and like the securty of knowing what I am paying. The issue is that I would like to shop around in the last year of the mortgage in which rates could be rising and I would be stuck unless I pay 4% that is!

Shop away. I dont think you'll find a lower erp on the same rate.

dave82_2

There is one with Leeds but the fees are huge!

Also keep finding an amazing lloking deal with RBS till i see the max loan amount is 150k :-(

housesitter

I've been in a similar situation recently.
75% LTV looking at 3yr fix at 4.39 and 5yr at 5.49.
Both of those are with Natwest; they were also offering a 5x multiple for me which I didn't need, but I bank with them if that makes a difference.

I can afford both of them however have gone for the 3yr in the end, despite wanting long term stability. I was even looking at a 10yr fix. I have no plans to move from my intended purchase.

Looking at long term rate potential, I wanted the stability however the difference between the two is 100/month. So I can over pay that anyway to bring the capital down on the 3yr and if rates rise dramatically I personally think it will not be in 3yrs time although that will be the upward trend, the big rates wont till till later. Possibly right when I'd be coming out of a 5yr fix.

I planned to overpay further, but instead will be putting that into savings.
If rates hit 10% with a SVR of 4% on top of that in 3 years time, I will still be able to afford the mortgage given the savings pot I will have to drive down the capital cost.
Or if everything is fine rates wise I'll have a money pot for an extension I have in mind.

I'm sure your situation will be different, but that's how I made my decision to go for a 3yr.

KazLA

Sorry, I'm not able to help with your question, but have a similar one to ask, so hope it's ok to do so here...

The majority of our mortgage is on a fixed rate with Britannia of 4.39% that is due to finish Dec 2010. They called last week to offer us a 'deal' where we could extend that rate for another 5 years, starting now - so basically staying at the same rate for an extra 'nearly' 4 years.

I'm very tempted to go for it, for several reasons -
-I like the security,
-It is fee-free,
-It seems a reasonable rate for a fixed rate,
-It will save us having any hassle trying to sort out a new rate next year,
-Their variable rate that we would end up on seems to be 4.24%, so not a great deal better.
-My earnings have more than halfed (due to having a baby and only working part-time) since we originally took out the mortgage, so I think I am perhaps more likely to get the go ahead on this, and worry that we may not be able to get a 'new' mortgage when the time comes.

But - am I doing the right thing??

Housesitter - seeing above that you are planning to fix at 4.39% is encouraging!

scoobysnax

I'm in the same boat with Britannia, offering an extension to the 5yr fixed at 4.39%. Waiting for a call back today and think I will take up their offer.
No fees and cannot find a better rate at the moment anywhere. Obviously a bit of a gamble as rates may be lower in a year, doubt it though....

dave82_2

I would bite their hand of if they gave me that!! Over the long term 4.39% should be lower than the average!!

Mcfi5dhc

I've done the Britannia 4.39% 5 year extension offer as well, for all the same reasons as above.

Never had a problem with Britannia, plenty of branches near me if I ever want to speak to a human as well.

Only slight problem is !!!!!!! Royal Mail - you need to sign a new document. However I received this yesterday, and you are allowed to take it in branch, which I'll be doing Saturday. There is only a short space of time from accepting the offer to completing (about two weeks). Normally, this wouldn't be a problem, but RM seem to screw everyting up.