Advice please

dj_kilmore

My partner and I are in the midst of trying to buy our first place together. We went to se a mortgage advisor and got an agreement in principle for a 2 year tracker mortgae with Skipton (4.89%) which we have followed through on and are waiting the result.

Sinceapplying for the mortgage I have become concerened re the talk of increasing base rate over the next 2 years. I know 8% is unlikely but even half of that would make choosing a tracker a costly mistake.

My partner is a student nurse and will be for the next year, then she is hoping to do an 18th month midwifery course. This has got me thinking along the lines of a long term fixed rate. ie Britannia 5 year fixed at 5.89% (we only have 10% deposit).

The way I see it is if interst rate go up 2% in the next 2 years then a tracker for that term is essentailly equal in cost to fixed rate over the same period, but then to change mortgage would mean the rate goes up regardless of which option I choose. If I fix for 5 years, I know what I am paying for that period and know that we are secure for that term regardless of what happens.

Aslo, is Britannia one of the more strict lenders? Just out of interest.

Advice is much appreciated.

TrickyDicky

If you're going for a tracker, always make sure you can afford a 5%+ rate rise. Otherwise you could get repossessed.

But you're correct about the rate rise thing, but usually its best to compare it over the whole term of the fixed rate. so a 2% rise over 2 years would actually mean over the 5years of the fix the fix was better.

its always going to be a gamble.

Savvy_Spender_South

Bird in the hand is worth two in the Bush

Eh? well if you can afford the 5 yr fix, take it for peace of mind whilst the family stabilize in employment. It would be different if we were at 5% now as rates can go down, but they cant, so its static or up.

You may pay a little more if rates stay down, but 5 more years like this? you will have bigger issues in that event so dont worry! Fix it!

herbiesjp

You will also save on exit/set up fees by going on a 5 year fixed rate, as opposed to looking for shorter term deals and having to re-mortgage sooner.

dj_kilmore

Anyone have any info as to how strict Britannia are when it comes to lending, particularly at 90%?

Thanks