YBS 2.89% Fixed - Good deal?

Beast

Hi All,

We're first time buyers and currently looking at mortgage deals. I just seen the following deal from Yorkshire Building Society which seems excellent but wanted to see if there were any obvious catches on the face of it I'm missing?

http://www.ybs.co.uk/campaigns/2yr_fixed1/index.htm?cmpid=272

Summary:

2.89% fixed for 2 years
£995 product fee
overpayments allowed up to a limit.

Peelerfart

And do you have the 25% deposit too ?

Beast

Sorry yes forgot to mention we have the 25%

InMyDreams

Catches are a high fee for a very short-lived deal. Even if you get the full 2 years (it's actually only until 30/09/12 regardless of when it starts) then that's the same as getting a fee-free mortgage that costs £40 per month more. (That's equivalent to about an extra half a % interest rate if you are only borrowing, say, £100k. If you are borrowing less it's even worse, although if you are borrowing more then it becomes less significant.) Say things get delayed and you only get 20 months (so that's about £50 per month if you spread it out) borrowing, say, £75K, I make that equivalent to an extra .8% on the interest rate.

Also, unless you are starting out with an excellent LTV, you may well find it hard to get another deal in 2 years if house prices drop at all in that time which means you will either be stuck on their variable rate or even if you can remortgage, you won't be able to get a competitive deal.

dimbo61

They also have a 5 year fix at 3.99% fee £995 so the fee works out at £200 a year and you have long term security.
Only consider this if you have no plans to move in next five years

Beast

I take the point with regards to 2 years, and looking at it the situation in 2 years time is likely to be one of an increased BoE base rate so it could be a false economy. A 5 year fixed does seem to offer great security but again the penalty for early repayment within that period if we were to move could be prohibitive.

Difficult times

Thrugelmir

Beast wrote: »

I take the point with regards to 2 years, and looking at it the situation in 2 years time is likely to be one of an increased BoE base rate so it could be a false economy. A 5 year fixed does seem to offer great security but again the penalty for early repayment within that period if we were to move could be prohibitive.

Difficult times

If you are looking to move then go for the cheapest rate available and overpay the mortgage.

Or don't even change your existing mortgage. Use the saved product fee to pay a lump sum off your mortgage.