Mortgage Advice

kier333

I am due to come out of my fixed rate end of Jan currently @ 6.79%, it was a 2 yr fix which i took with a 10% deposit, all i could get at the time i have 112k out standing. Anyway i am thinking its best to re fix but not sure if i should go for 2 or 5 yrs? I spoke with the Bank today and i am currently at 80% LTV so can fix @ 3.49% for 2yrs or 4.79% for 5yrs both with fairly resonable booking rates £99/£199, i do like the look of the 5yrs as it reduces my monthly out going by around 140pcm and i know where i am for the next 5yrs, i can also make an over payment of 20% pcm reducing the over all term of the loan and saving myself money. They are also doing a Tracker which is 2.49% above the Banks rate which i believe to be 0.5% atm.

They are also doing a 2yr fixed special @2.79%

This is my first property and any advice would be great, will rates increase? Decrease? I guess that is a big debate!

jd1000

Everyone seems to think that rates will go up, to me it makes no sense as surely that would stall the recovery, but with the base rate at 0.5% I dont think they can drop much further.

Its a guessing game really, but from the sounds of it the 5 year one will buy you more peace of mind (my five year fixed rate is 4.79 and is ending in 2011, and I cant tell you how glad I was that I had it during all the uncertainty).

Hope that helps

JD

FinAdv

Hi,

I absolutely agree with JD there. No one can predict the interest rates but since they are at the rock bottom, there is every chance of increasing but noone knows at what rate.

Fixed rate for 5 yrs seems to be the best choice for peace of mind. It just allows you to plan your finances much more effectively once you know you outgoings are fixed. Its not like a hanging sword where you would think everyday that the interest rate might increase dramatically and would you be able to afford the payments or not.

Cheers

slummymummyof3

We took out a 5 year fixed in October @ 3.94% with HSBC (arrangememtn fee was £99)

Ivrytwr3

best rates for 85% LTV 5 yr fixed?

(in same boat as OP)

getmore4less

Whats the followon rate if that is low enough it might be worth keeping that and overpay.

Ivrytwr3

getmore4less wrote: »

Whats the followon rate if that is low enough it might be worth keeping that and overpay.

low - but i'm a panicker! I like to know what i am paying per month and it's my opinion rates are going to rise. So i'd rather lock in now while the rates are low.

Good idea or not?!

getmore4less

Certainty of payment each month or smaller mortgage.

Depends how low yours is.

I think that even with rate rises the low cost trackers will stay competative so for short to medium fixes 3-5 years people are unlikely to be worse off as long as they overpaid as if they were on the higher rate allready.

bluestone_2

I will be coming out of a fixed soon and wondering to go tracker or fixed?

Is Barclays "The Great Escape Mortgage" worth looking ?

If I am thinking of selling and getting a new property within 1 or 2 years what would be the sensible options?

Thanks

Lynsey

kier333 wrote: »

They are also doing a 2yr fixed special @2.79%

That's a great rate and if you can control/save the difference it would finance future years.
The 4.79% over 5 years gives stability, but for the 1st 2 years at least you would be paying 2% over the "fixed special rate". In 2 years time you may be in a similar situation or perhaps another 2 year rate at say 4%. Even fixed again at 5% would work out cheaper taking the cheap 2 year rate into consideration.
The choice is yours, but that 2.79% looks interesting. You need to work and re-work the figures.
Also remember, the longer the fixed rate, generally the higher any early settlement figure if you are thinking of moving (check to see if it's portable).

Lynsey

Peelerfart

For my twopence worth.

If you are coming to the end of your fixed,then the boat has well and truly sailed as regards to bargain trackers.
As for the interest rate then really, "the only way is up".

Therefore,if the circumstances of you taking the first fix remain the same,then fix again and fix for five years to eradicate any uncertainty in the near future.

A sub 5% rate for 5 years seems pretty cheap to me historically.

But of course - I may be wrong,it's just an opinion after all.