Mortgage newbie - interest rates

MascaraMinx

Afternoon guys and gals,

I have a question about my mortgage and the interest rate. We are about to embark on a 3 year fixed rate 100% mortgage so as you can imagine the interest rate ain't that good (6.19% :eek: ). However, we have got a strategy in place to make regular overpayments and also lump sums (at bonus time etc) to try and counter this disadvantageous position. My question is this:

In 3 years time when we come to remortgage, how will our position be viewed by the mortgage lenders? Will we be in a position to negotiate a more competitive interest rate than we are currently stuck with, or will we still be limited to certain lenders/ products? Does this depend on the equity in our house at the time? Does anyone have any additional advice on how to get ourselves in the most advantageous position in 3 years time (ignoring the fact for now that interest rates may have shot up generally).

Thanks for any useful advice/ comments

silvercar

what you need is for house prices to go up in the next 3 years and/or your lump sum payments to have made an impact.

With a bit of luck your mortgage will then be a lower percentage of the house value, opening up more deals for you.

Kepp your credit rating clean in that time.

MascaraMinx

What sort of percentage would we be looking at - are there good deals for 95% mortgages or are we looking at much more than that? Thanks

jamminjamaica

when the time comes to remortgage i am sure you will be able to get a better deal. just make overpayments etc and keep all of your payments on time.

UK007BullDog

If you are doing a repayment mortgage then you will have paid back some of the loan, you will have created some equity if the house price does not drop but stays static. Look at the illustration you were given which will tell you how much you have actually paid back of the equity parts. If the house prices rise then in 3 years time you should have enough equity to get a better deal.

If you are on interest only you might be riding the risk if the house price stays static or even falls, going into negative equity, even if you are overpaying.

Then make sure you are allowed to pay back any lump sums without a penalty fee and the same goes for general overpayment's. If they wont allow it then just put the money in an ISA or savings account and save it up to use it as a lump sum payment toward the new mortgage.

Of course no one knows what the rates will be in 3 years time, if house prises rise crazily or fall or stay static, however it is best to have at least 3% - 5% deposit or even better 10% to 15% to get a much better deal with an impeccable credit record.

But in the end think of your property as a home a place to have a great life, to have some great memories, and not just as a cold investment.

MascaraMinx

UK007BullDog wrote:

But in the end think of your property as a home a place to have a great life, to have some great memories, and not just as a cold investment.

Thank you for that. Sometimes you lose all perspective in this crazy world eh?!