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fixed rate for 5 years?
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yogiberr
Posts: 173 Forumite
hiya,
I'm buying a place at 82k and I have a 16k deposit.
Everyone's telling me that I should get a fixed rate for as long as I can ( because they say that interest rates will be rising for a long time )
I'd like a 20 year term and be able to overpay without penalty.
Any advice appreciated.
Cheers,
yogi
I'm buying a place at 82k and I have a 16k deposit.
Everyone's telling me that I should get a fixed rate for as long as I can ( because they say that interest rates will be rising for a long time )
I'd like a 20 year term and be able to overpay without penalty.
Any advice appreciated.
Cheers,
yogi
0
Comments
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I'm in a similar dilemma. My current deal runs out next month and I have to choose between a 2 year or 5 year fixed. I know that none of us can tell the future but I'd be interested in the general sentiment on this forum. Fortunately I can get a preferential rate through work which means I could get a 5 year fixed for the same cost as a 2 year fixed elsewhere. Or I could get a 2 year fixed even cheaper of course.
Trying to decide which would be the better option."I don't mind if a chap talks rot. But I really must draw the line at utter rot." - PG Wodehouse0 -
At the start of 2005 most pundits were saying interest rates would rise and probably be between 5.5-6% by the end of 2006. During the year they fell slightly and earlier this year the same pundits were predicting 1 or 2 further falls in 2006. Not half way through the year they're now back to suggesting rises later in the year.
These guys have degrees in economics coming out of their ears, makes my brain hurt just thinking about about their qualifications and experience but even they don't *know* which way interest rates will go even in the short term let alone over a few years.
On the one hand IR are at an historically low level, on the other so is Inflation. Rather than trying to guess which way they'll go read Martin's article about fixed v variable on the Mortgage section of the site and decide whether you need the reassurance of fixing or can afford to take more of a risk with a variable tracker.
As for how long if you decide to fix, IR guessing is probably less important than likely changes in personal circs, housing needs, job etc. If you can't foresee these changing much in 5yrs fine, if you can consider a shorter fix.
HTH.0 -
Let me look into my crystal ball....
Roger Bootle was predicting rates at 3.5% by now. Oop!
Other economists were predicting rates at 4%. Oop!
Some economists are now predicting rates at 5% by the end of the year.
Who knows? And really, it all depends on what happens in the world.
If the US economy starts to slide, rates could be cut. If Japan's recovery falters, rates could be cut.
If the Oil shock starts feeding through, rates could rise. etc etc
10 years ago, few people were predicting that rates would fall, and stay low.
30 years ago few people were predicting booms, busts and rampant inflation.
So in summary, my crystal ball tells me: take a long term view. Right now, IRs are very low. But that doesn't mean they won't go lower, or indeed very much higher.0 -
yogiberr wrote:hiya,
I'd like a 20 year term and be able to overpay without penalty.
Any advice appreciated.
So trying to get back on topic, and hoping people can be helpful instead of trying to be funny, are there any mortgages that allow overpayments but have a fixed discount rate ?
Anyone else who has too much time on their hands to post something truly helpful, may find an interesting read here: Crystal Ball Knob SetDoing my best as a contrarian investor...property, banking...let's see how it goes0 -
Decadent Fool posted: So trying to get back on topic, and hoping people can be helpful instead of trying to be funnyyogiberr posted: Everyone's telling me that I should get a fixed rate for as long as I can ( because they say that interest rates will be rising for a long time )brasso posted: Fortunately I can get a preferential rate through work which means I could get a 5 year fixed for the same cost as a 2 year fixed elsewhere. Or I could get a 2 year fixed even cheaper of course.
Trying to decide which would be the better option.are there any mortgages that allow overpayments but have a fixed discount rate ?
Hope that was reeeeeeeeeeally helpful.0 -
I'm in the same boat. My initial 2 year fixed is up at the end of June, so I guess I need to be doing something about it. I'm torn between going for another 2 year fixed rate and getting a better rate of interest or going for longer terms. I also need to reduce the duration of my mortgage down from the 32 years left to (ideally) nearer 23.
However, if I move, I may find myself in a less well-paid job, so have to consider that two.
Decisions, decisions
Stephen0 -
why not got for a three year fixed? it could be better value than a five year and you are not tied in for so long. As has already been stated, nobody has a crystal ball and even economistcs struggle to predict accurately what will happen with interest rates. Its all about YOUR attitude to risk so nobody can tell you what to do. Why not contact a whole of market broker and get them to do a comparison, they will then explain the implications of each. From my perspective I would rather pay the price for flexibility, perhaps taking a tracker with no early repayment charges but that won't suit everyoneI am a Mortgage Adviser
You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thanks for the info all. I think we are going to go for the 5 year fixed simply because it gives us some certainty in what I think is an increasingly uncertain period. Appreciate that there is a risk in the other direction -- that rates may remain low and we end up paying more than we could have been, but on balance that risk suits us better than the other sort. We also have the option of overpaying by 10% which we will take advantage of while rates are low.
It's a gamble either way, but we've decided to go for what we consider the 60:40 rather than the 40:60 option (so to speak).
Your mileage may vary!"I don't mind if a chap talks rot. But I really must draw the line at utter rot." - PG Wodehouse0 -
Flexible Five year fixed? Northern Rock's fixed rates allow you to overpay as much as you want as long as you don't pay the loan off completely, ie leave £1.00 on the balance, without penalty and you can then borrow back your overpayments at the product rate without fee or application. Not the cheapest rate on the go but you gets what you pays for......Number 86 - Stole a car from a one legged woman... I'm just trying to be a better person0
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In same position - have decided on 3 year fix with either Nationwide or Yorkshire B.S. Both are flexible about overpayments and both pay your legal and valuation fees and charge just £95/99 for the set up.
Oh and they have some of the lowest rates.0
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