First Time Buyer mortgage

andrewr22

I'm in the process of finding a mortgage. I have a mortgage promise from Halifax for 5x my salary and some other offers for slightly less from other providers.

The main problem I'm having at the moment is deciding between fixed and variable rate. In some ways fixed is great as I'd know what the repayments are and with a 5yr fixed rate that's pretty good. The best 5yr fixed rat I can find is 6.34% with Natwest (recently increased from 5.99% to 6.34%!!)

However, with interest rates low variable is quite attractive. Personally I can't see interest rates increasing significantly over the next 2-3 years so I'm thinking I should go for a 2yr variable at 2.49% above base (2.99% at the moment) and then look for a new product in 2 years. I'm no economy expert though!

What would people recommend? Anything else I should consider? What are your thoughts on interest rates?

Thanks

sammyjammy

Dependant on the size of your deposit you are taking a big risk at borrowing five times your income, couple that with a variable rate and you are taking a big risk, what if in two years rates start to shoot up and you are close t onegative equity?

andrewr22

sammyjammy wrote: »

Dependant on the size of your deposit you are taking a big risk at borrowing five times your income, couple that with a variable rate and you are taking a big risk, what if in two years rates start to shoot up and you are close t onegative equity?

I've prepared a budget plan and I can afford to repay a mortgage 5x my income.. just. Basing that on a 5yr fixed rate mortgage.
My deposit is 15%.

So you'd recommend against a variable rate then?

herbiesjp

What disposable monthly income do you have to throw at a mortgage?

Based on the variable rate, what would interest rates have to be in order for you to get close to your maximum budget?

These two questions would need answering, in order for you to determine how comfortable you were on a variable rate mortgage really

andrewr22

Around £900/month for mortgage repayments.

I actually made a mistake when looking at the variable mortgage rates, I'd actually be looking at 4.14% above base with my deposit (15%). Therefore to reach the fixed rate level of 6.34% interest rates would only need to rise to 2.25%, i.e. increase by 1.75% on the current level.
After finding this out the variable rate doesn't look so appealing.

herbiesjp

So now that you have cleared up that question, you now need to find the most competitive fixed rate mortgage at 85%

andrewr22

herbiesjp wrote: »

So now that you have cleared up that question, you now need to find the most competitive fixed rate mortgage at 85%

Yep which looks to be 6.34% with a £0 product fee from what I've found.

Does anyone know of anything better?

matttr6

We had a meeting/ application with natwest last week and was advised to go on their tracker for 3 months then move across to there 5 year fixed at 5.25% (as you are an existing customer then)

We are ftb's with a 10% deposit borrowing £135k

mclaren32

matttr6 wrote: »

We had a meeting/ application with natwest last week and was advised to go on their tracker for 3 months then move across to there 5 year fixed at 5.25% (as you are an existing customer then)

We are ftb's with a 10% deposit borrowing £135k

Sounds like a great deal but I would check that very carefully, the eligibility for that deal is as follows (from the natwest site).....

Existing NatWest mortgage customers looking to change deal

Exclusive to: Residential customers currently on NatWest Standard Variable Rate or customers or at the end of their current NatWest mortgage deal.

You wouldnt be on the standard variable rate or at the end of your current deal so I would be amazed if they were able to do what you are suggesting.

nat82

RBS are 6.34% with £0 fee for their FTB rate (5 year fixed) or 2 year fixed at 6.09% (6.59% for 5 year fixed) but with £999 fee.

herbiesjp

If you are looking at arrangement fee free deals then that is the probably the best over 5 years

Otherwise there are cheaper deals, but with arrangement fees to pay