CO-OP 5 year

Jonny_D_2

Hi
First post so go easy..!

Myself and Mrs are currently on the Nationwide BMR at 2.5%, but considering fixing into the COOP 3.99% 5 year fixed. Our Mortgage balance is 120k, but we're currenly repaying 1000 per month to reduce the term.

1st question - does this seem like a sensible idea given the good rate we are on? I know, can't predict future rates... etc... but I'd be interested to know what other people in similar situation are doing?

2nd question - we bought our house for 157k back in april 2007, although I believe we got a good deal as the seller needed a quick sale and already had one buyer pull out. Nationwide's valuation at the time just basically confirmed 157k was realistic and hence their valuation now would be about 145k - this means we wouldn't qualify for the 75%LTV needed for the COOP. However, we've had estate agents value the house at 165k (+evidence of local sales) - which would qualify. Are COOP likely to just use nationwides valuation?

I don't want to waste time and money if I'm not likely to qualify for this mortgage but I'm particularly attracted to the long term security of the fixed and would be tempted to go for it if I knew I'd definitely get the 75%LTV.

Cheers
JD

bazza1603

Chelsea BS have got a five year fixed at 3.99 percent with lower fees by looks of things. Still 75 LTV.

Sorry can not help with your questions

Baz

f1-fan_2

Most opinions I've heard on fixing are if you want to be certain of what your payments will be for a set time. But, they are probably not the cheapest.

If you switch, I reckon you'll be paying £150 extra interest per month with the Co-op deal, so if it were me, I'd stick with the 2.5% rate and keep overpaying and you'll make a bigger dent much quicker in your mortgage.

Thrugelmir

Why do want to fix your mortgage?

Interest rates are never going to be this low again in your lifetime. So whilst you have such an exceptionally low rate why not continue to overpay your mortgage.

f1-fan_2

Co-op's 5 year fix now appears to have risen 0.8% from 3.99 to 4.79, so not so attractive anymore :-(

property.advert

Unless you are used to options pricing and if you were then you wouldn't be asking the question, then the easiest way to think about it is like a graph, but one which starts below zero. On the Y axis you start from below zero and only cross the X axis at zero when the variable rate equals the fixed rate (ignoring for now the fees). If the line goes up (as interest rates rise above the fixed rate) then you lose money, which offsets the money you save in the time before interest rates reach the fixed rate.

In the most simplistic situation, with a 5 year fix, your line would cross X at 2.5 years and the money saved would equal the money lost, meaning a nil gain or loss.

Bring back all the fees and the rate has to rise higher above the fixed than it currently is below the fixed (if using a straight line) for you to be worse off. You further complicate matters because you are overpaying, thus reducing any amount which you would have to pay at higher rates.

I can save you the maths as I've done it quite a few times. By a long margin, unless rates rise to around an average of 6/7% you will be better off doing nothing and in your example, because you are overpaying, they would have to rise even further or sharper and remain higher for longer.

Do nothing, as someone once said, you have never had it so good.

hwalkerh

They have pulled the 5 year fixed at 3.99% now as there was so much interest.

AdamBrunt

Thrugelmir wrote: »

Why do want to fix your mortgage?

Interest rates are never going to be this low again in your lifetime. So whilst you have such an exceptionally low rate why not continue to overpay your mortgage.

There are many reason why they might want to fix.

By all reports, the BoE rate won't be at 0.5% for much longer (certainly not in a year's time or even 6 month's time) and once it starts rising all the lenders' SVR will also start rising as will Fixed mortgage deals. In other words a Fixed 3.99% rate isn't going to be around for long (and I see the co-op one has already gone) and once the BoE rate goes up you'll won't be able to get as good a Fixed rate.

ajex

Well the processing of 3.99 fixed rate has been quick so far fingers crossed...

Within 1 week got valuation done and got homebuyers report confirming valuation by email within 48 hours ,Impressed so far!!!

bazza1603

I have applied and paid my fee, but signed application was only sent back on Thursday due to some duff advice from Britannia.

Hope they honor my deal as we havenot see an offer yet

Chelsea still have a 3.99 5 year fixed deal with a £600 fee

hwalkerh

ajex wrote: »

Well the processing of 3.99 fixed rate has been quick so far fingers crossed...

Within 1 week got valuation done and got homebuyers report confirming valuation by email within 48 hours ,Impressed so far!!!

who is this with? I have signed up for the 3.99% brittania mortgage. They have all my forms and fees and sols have requested settlement figure from current mortgage company.