choices

pitchshifter1

First post and a bit confused with the whole idea of finding a new mortgage ....any help , advice appreciated

Have just sold our house and have a profit of £95k to put down as a deposit on our new house

We have just bought a new place for £205k , so will be looking at a mortgage of £110k capital and interest over 19 years

What mortgages are looking good at the moment guys, we have been recommended by our mortgage adviser to take a look at the Abbey 3.24% 2 year fixed , this works out at £653 per month
Or
Halifax 4.69% fixed for 2 years , this works out at £737 per month

Any thoughts on these appreciated , thanks

getmore4less

Get him to justify fixing for 2 years

Just long enough to be hit by any rises(if they happen) and and not really save anything while the rates are low.

Another nice set of commission in 2 years.


What was the deal you gave? up was that portable?

any fees on these deals?

LTV is good so a lot of options if salary multiple is good.

opinions4u

pitchshifter1 wrote: »

What mortgages are looking good at the moment guys

Take a look at www.moneyfacts.co.uk/mortgages and have a play around there. It will help you see a wide range of options.

we have been recommended by our mortgage adviser to take a look at the Abbey 3.24% 2 year fixed , this works out at £653 per month
Or
Halifax 4.69% fixed for 2 years , this works out at £737 per month

My first question is why 2 years? It seems short. That's not to say that you shouldn't fix for 2 years, but it is opening up 17 years of uncertainty at the end.

My second question is why even discuss the Halifax deal beyond dismissing it to justify the Santander deal? What could possibly make the Halifax deal better value? It may be in the fee or penalty structure - but you need to understand this clearly.

Perhaps ask about the Santander 4.45% fixed for 5 years deal.

thewinkshow

tell your mortgage advisor hr is an idiot - when he say I am not, ask him to prove it.

I know nothing about about mortgages (compared to him)

and even I can tell you that the base rate will not be going any lower - therefore the only way for the base rate is UP - especially under cameron
its a question of when, not if.

it will probably stay the same for a while, but in 2 years time it will be the perfect time for rises, just when you need to remortgage, he gets another set of fees, you pay more. to avoid the rises get a longer fixed rate mortage.

I dont know your cercumstances, but there seem to be better 2 year fixed rate mortgage than halifax and abbey - just compare them to the post office, ing direct and HSBC - all seem better if you MUST have a 2 year fix.

have a look at the post office 3 and 5 year fixed rate, much better i think.

property.advert

Chuck this advisor immediately. He is a clown or trying to rob you blind.

I guess you were an original 25 year mortgage customer and had 19 years left on the old one and now want to keep the same 19 year term. Old fashioned thinking but secure to end at a certain date. You can of course go interest only and use any investment vehicle to repay the mortgage. With historically low interest rates, I'd be paying down on the mortgage, though I would have it as interest only with no penalties for overpayments. Simply, £110k at 2.5% costs £229 a month whereas the medium term rate of say 6% would require you to pay interest of £550 a month.

Rates will go up but I agree that remortgaging in 2 years time is likely but not guaranteed to be at a time of higher and possibly rising interest rates. However, there were 2 year fixes at 2.5% and you can get under 2.5% on a discounted deal with no tie in.

On your mortgage, each 1% rise costs you £92 per month. A 5 year fix at 4.29% with First Direct would cost you (4.29%-2.39%)*£110k=£174 per month which you could use to pay down the mortgage. You would not start to "lose" money until rates rose by 2% and if you fixed at around 2.5% for 2 years you could overpay 24*£174=£4176. Rates would then have to be an average of 6.93% for the following 36 months on average (to have net net interest payments and to give back the £4176 overpay) £500 fee included.

So if you think that rates will be at over 6.93% for all of the 3 years starting in 2 years time, then the 4.29% fix is the best deal but if you think rates for that period will average less than 6.93%, the 2 year fix plus anything lower than 6.93% for 3 years will be a better deal.

Sounds a no brainer to me, 2 year 2.5% or so fix and then less than 6.93% in 2 years time.

pitchshifter1

Thanks for that information,never considered working it that way before
You are right in thinking our approach is the more 'traditional' mortgage routes, but hey, withough impartial advice how would you know?

I have to be honest that interest only for two years would definitely meet our needs as new house buyers (outlays etc etc) but still a bit apprehensive about taking this approach, in the event that it impacts further down the line.

Appreciate you dont have full figures etc, but could you give a step for a hint about possible impact.

We have been looking around now, on the basis of advice, and actually quite scandalised doing comparisons of mortgages. Even on basis of a fixed rate for two years, HSBC are coming in around £100 pcm cheaper

A tersely worded e mail in preparation of our next meeting will be sent....

pitchshifter1

Thanks again everyone , been comparing mortgages on moneyfacts site

Looks like the 2 original deals our adviser has recommended look very poor.....to say the least

We really like the idea of either fixing for 5 years or taking a interest only for 2 years at 2.5% ish and overpaying ..........we had not ever considered doing this before so any more advice on this would be great , thanks

Henry_P_Chester

Fixing for two years at the rate is terrible. You can get a 5 year fix at a better rate with nationwide.

Depending on who you ask rates will rise anything from next month (barclays capital) to next year, but I think its safe to say that in 2 years rates will still be rising.

I am planning to fix for 10 years with Brittania so I know for sure what I am paying.

getmore4less

The simple thing with debt is you are committing yourself to needing to earn in the future(to repay the debt) and untill it is repaid interest.

Mortgage free means reduced earning requirements in retirement(no rent).

So by going interest only you delay debt repayment which requires future earnings to be higher than if you started now.

Emergency funds can mitigate the loss of earnings but thats a trade off againsts actualy paying off the debt and reducing costs(interest).


Check the followon rate with any fixed deal don't asume you can remortgage next time if you fix.

_Andy_

pitchshifter1 wrote: »

I have to be honest that interest only for two years would definitely meet our needs as new house buyers (outlays etc etc) but still a bit apprehensive about taking this approach, in the event that it impacts further down the line.

Very few lenders will offer pure interest only (HSBC is not one of them)

Even on basis of a fixed rate for two years, HSBC are coming in around £100 pcm cheaper

A tersely worded e mail in preparation of our next meeting will be sent....

HSBC don't offer mortgages via broker so they wouldn't have appeared in the broker's sourcing.

pitchshifter1

Should have mentioned that the purchase price of the new property was £205k but the actual value was £170k
Will still be putting down the whole £95k profit

Will be calling HSBC tomorrow