Help deciding...

stmatt

Hi

We're about to take out a large mortgage (approx £250000) with a 60%LTV and obviously want to make this as cheap as possible. We're considering a number of different products. The first is HSBC's fixed rate but not sure how many years to fix for (2 years@ 3.49%, 3 years @3.74% or 5 years @4.29%). The second is the HSBC lifetime tracker special @ 1.79% above base rate so currently 2.29%).

Does anyone have any guidance or advice?

Thrugelmir

stmatt wrote: »

We're about to take out a large mortgage (approx £25000)

Large?

Is there a digit missing.

dimbo61

With a lot of lenders the minmum is £25K so if it is a typo and you mean £250,000 then you might want the security of a long term fix for 3/5 years and I think HSBC allow overpayments of upto 20% a year but please check this

stmatt

Thanks for spotting that. My sub-conscious has obviously cottoned onto the fact that this is an extortionate amount of money - should be £250,000.

originalmiscellany

I'd go long term, but also be in the position where you could make overpayments without incurring a charge.
Will you be in a position to make overpayments?

stmatt

Yes we will be in a position to make over-payments with current interest rates. However will be using all of our savings to fund the deposit and house needs work doing to it. Ideally we would pay off extra mortgage and save a little each month. Form this point of view the fixed rate is better because we know where we are each month. However we would be able to save more with the tracker at current interest rates.

dimbo61

The question you need to ask yourself is do you think rates will return to the NORM! in the next 2/3/5 years.
Buying a big expensive house is one thing but buying a big expensive house that needs work doing on it is a different ball game altogether.
If you pay £420,000 for a property that needs a new kitchen/bathroom you cant nip down to B&Q and pick up a £399 bath/toilet/basin or a £2000 kitchen can you!

Meeper

dimbo61 wrote: »

I think HSBC allow overpayments of upto 20% a year but please check this

This is an annoying part of HSBC's products. They allow up to 20% overpayments, but it is 20% of your monthly payment, not 20% of your balance. So, if your monthly payment is £500 you can overpay by £100 per month without penalty. This can be very misleading to clients as they are the only lender (as far as I am aware) who work out their overpayment restrictions this way.

dimbo61

I stand corrected Meeper so the 20% overpayment is a red herring really and you would have to reduce the term:-) if allowed!

Thrugelmir

Meeper wrote: »

This is an annoying part of HSBC's products. They allow up to 20% overpayments, but it is 20% of your monthly payment, not 20% of your balance. So, if your monthly payment is £500 you can overpay by £100 per month without penalty. This can be very misleading to clients as they are the only lender (as far as I am aware) who work out their overpayment restrictions this way.

You can't expect market leading rates with no penalty or limitatation on overpayments.

Banks are businessess.

Burridge60

Thrugelmir wrote: »

Banks are businesses.

Some may beg to differ. :beer:

They don't ride Black Bess anymore! Tongue in cheek !