FTBs, fixed or variable mortgages?

robmatic

RenovationMan wrote: »

Anecdotal and hearsay evidence points towards the first couple of years of home ownership being the most difficult financially. Especially if any building works are being undertaken. There is no way in the next couple of years that rates are going anywhere. If you can get a low 2 year tracker then I would do that.

Once you have settled into your new home and your new finances you'll have a better idea of whether you really need to fix or not.

That's arguably a justification for taking out a fix: the security of knowing what that outgoing will be when finances are tight.

If you're a first time buyer and it's also your first home the reality of household budgeting might be somewhat different to your prior expectations, so in that sense perhaps a predictable expense would be better.

Clearly much depends on the attitude to risk.

One approach would be to take out a tracker but budget as if you had fixed. Save the difference in an offset or other account as a reserve for whenever rates do rise.

RenovationMan

robmatic wrote: »

That's arguably a justification for taking out a fix: the security of knowing what that outgoing will be when finances are tight.

If you're a first time buyer and it's also your first home the reality of household budgeting might be somewhat different to your prior expectations, so in that sense perhaps a predictable expense would be better.

Clearly much depends on the attitude to risk.

One approach would be to take out a tracker but budget as if you had fixed. Save the difference in an offset or other account as a reserve for whenever rates do rise.

As you say, each to their own but I always view a short term fix as the worst mortgage possible. You either end up paying a lot more for your mortgage over those 2 years or your mortgage ends during period of high rates and you pay more after the 2 years.

I just can't see rates rising for 3 years, so a fix for less than 5 years is a waste of money and false security.

andybenw

RenovationMan wrote: »

As you say, each to their own but I always view a short term fix as the worst mortgage possible. You either end up paying a lot more for your mortgage over those 2 years or your mortgage ends during period of high rates and you pay more after the 2 years.

I just can't see rates rising for 3 years, so a fix for less than 5 years is a waste of money and false security.

A 5 year fix is what Percy mentioned he is going for.


Percy, bear in mind mortgages are not the only things where the price moves. Inflation in general at the moment especially in energy costs could hit hard

Cleaver

Percy1983 wrote: »

Right now I can find a 5 year fix at 4.99%

Percy1983 wrote: »

The house is actually in New Moston

By taking the fix wouldn't this mean that you have to live in Moston for at least five years?

Percy1983

Plan is at least 25 years so yes happy enough with that.

nollag2006

Other option is to get two products with the same mortgage provider - one fixed and one variable. That way you are at least partly hedged against any adverse movements in interest rates. Although with such a low deposit, you might find it hard to get decent products.

Have you spoken to a broker?

nollag2006

Well done on deciding to jump on the ladder. There is great freedom in not being beholden to a landlord, and to looking forward to living rent and mortgage free in the years to come!

Percy1983

Thank you for all the input, I looked at some of the variable deals and it was only about £20-30 a month better off.

As it is I have just got a AIP on the 5 year fix mentioned and my offer on the house has been accepted.:beer::j

Cleaver

Percy1983 wrote: »

Plan is at least 25 years so yes happy enough with that.

Serial killers usually get away with less than 25 years in Moston.

Percy1983

Cleaver wrote: »

Serial killers usually get away with less than 25 years in Moston.

Most probably, looking at crime stats I am actually moving to a nicer area so all is good, I will say its on the border of new Moston and Chadderton so not the heart of Moston.

Either way I am happy.