6.79% fix for 5 years - opinions?

jw2003

Could you cover a higher fee for a lower rate? We got a 90% mortgage 14 months ago at 6.7% fixed for 2 years with a £999 product fee which we added to the load but this was 3 weeks before the base rate was slashed. I honestly (and not an ms expert here obviously) that with the base rate being so low rates would have been better

Bexter

getmore4less wrote: »

Thing is if you want decent rates you either need to build up a bigger deposit by saving more before you buy or overpay a lot if you buy to get LTV down to get the reasonable rates.

Interest only £200k at 5% will be costing £800pm on that 6.79% £1132pm

Thats just the interest and similar to your rent

If you have not managed to save a decent deposit and are paying debts with rent at £1k then how are you going to find another £20-£25k over the short term(2y-5y) to get a better deal next time and even then we are still looking at 80% 75% deals if you save the higher end.

House prices drop a bit and you need even more so potentialy you are stuck on another high rate deal or the follow on rate.

These days you can't depend on rising wages and house prices to improve the situation.

Life style choices are yours but if your new priority is getting a house and stability then you might want to review your spends and priorities to reduce the risks going forward.

Have you done the "what if" for another baby and more maternity leave?

Agreed - we will struggle to overpay though we're actually hoping to buy c. £200k so our mortgage will be around £180k. At 6.79% we've been quoted about £1250 a month repayment.

I guess the things in our favour are that we both have good job stability (him a paramedic and me on long term government contract work) and we will buy in an area that stays pretty stable house price wise due to excellent local schools. By the end of the year our debt will be reduced significantly (we're hammering away at the credit cards and our loan will end) and that will obviously free up a lot of income to either put towards overpayments or save for next baby.

I know myself that the sensible thing to do is stay put and save more but the most we would end up with this year probably wouldn't even be another 5% and I do think we're better clearing our costly debt before saving more. And if we wait too long this place we're in is likely to be put up for sale, meaning we'd have to make an interim move which I really wanted to try and avoid. But I guess we need to look at all options..

Bexter

jw2003 wrote: »

Could you cover a higher fee for a lower rate? We got a 90% mortgage 14 months ago at 6.7% fixed for 2 years with a £999 product fee which we added to the load but this was 3 weeks before the base rate was slashed. I honestly (and not an ms expert here obviously) that with the base rate being so low rates would have been better

Yes - but I guess the rate would need to be considerably lower to balance out paying a higher fee, if that makes sense!

getmore4less

Bexter wrote: »

Yes - but I guess the rate would need to be considerably lower to balance out paying a higher fee, if that makes sense!

Based on a £180k loan over 3 years @ 5% repayment over 20y

£1188pm after 3 years outstanding is £163,026.04

Same payment(£1188) with a £1k fee to have £163,026.04 left after 3 years on a £181k loan

4.79% so 0.21% difference not that big.

mistermoneysaver

Alisonb1975 wrote: »

We got a good 4 year fix fee free at 4.69 with the Principality BS. They have been very good. we have a low LTV so not sure what it would be at 90%.

What was you LTV- I am looking at this one too

Thrugelmir

Bexter wrote: »

To be honest, I didn't post this to get opinions on how much we should have saved up or could save up! This seems to happen every time I post on the forum these days. getmore4less - how can you suggest what we should be able to save when you don't know what our outgoings are?!

I don't think it's an obvious question why we have a 'low' £20k deposit - but since you ask, we have a baby, I've been on mat leave, we are paying some debts off - but ultimately, we want to buy to get some stability instead of running the risk of having to move every 6 months with a wee one, as can happen when renting.

Don't take the posts personally. While taking on a large mortgage is manageable in your eyes now. Life has lots of twists and turns, ups and downs. So people are often expressing an opinion on something that they have themselves have endured.

Your other debts would have been noted when the "affordability assessment" was done. Lenders are far more cautious now. They have no need to take excessive risk. So clearing your other debts should be a priority.