To fix or not to fix???

LJS_2

Currently looking to remortgage from a self build prperty (completion certificate just received) and move to a conventional mortgage.


We've been to one mortgage broker who seemed to be steering us towards either a 3 or 5 year fixed mortgage in general. His theory being that interest rates have been so low for 3 years that in the next 3-5 years they are highly likely to start going back up. I'm tempted by a 5 year fixed deal but would be grateful for advice. I appreciate it will be down to specific deals available at the time, but interested to get general viewpoints on this.

Mortgage term would be 20 years (with hope of paying off sooner - hoping to over pay most months) and LTV is 46%.

This is the first time we have ever had a mortgage (apart from self build) so any advice would be helpful!

Thanks

ACG

My opinion is that rates wont rise for a while and even then it will be very slowly. I would personally probably be taking a variable/discounted mortgage for maybe 2 years then looking for a longer term fix.

But thats my opinion based on my circumstances.

DominicJ_2

I'd fix
You can fix at 4.79 for 5 years with a 10% deposit, as low as 3.39% with bigger deposits at ybs.

A tracker is insanity at the moment, rates arent going to go negative*

The lowest tracker only 2.49%. You save a fairly inconsequential 0.9%, which could be wiped out at any MPC meeting.

For me, the risk of interest rates spiking up to 10% far exceeds the cost of the slightly higher, but fantasticaly cheap fixes.
But thats just me.

*Rates have gone negative before, I believe in Switzerland.

chewback

Rates are going to be low for at least another 2 years so is yo do look at a fixed rate you need to look at 5 years. Accord and Woolwich have 2 year tracker that then go to a fixed rate for the next 3 years which seems a good compromise.

LJS_2

Thanks for your replies. Think we are most likely to go fix as sounds like a good plan and like the idea of knowing exactly what we'll be paying each month.

Now just need to decide on the term!

Thanks again!

tc9604

I disagree with some of those comments. Are you sure you want to be on a 90% LTV rate for the next 5 years?

In a couple of years you're likely to have 15% equity and be able to re-mortgage on more favourable terms, whilst having saved money in the short term by taking the lower rates.

However no-one can predict the future of credit availability

EDIT: just seen you have a low LTV (as opposed to the 10% deposit someone mentioned) so that makes a fix more attractive.

zappahey

chewback wrote: »

Rates are going to be low for at least another 2 years

Any chance of getting me this week's lottery numbers?

Morgage_Confused

I saw the woolwich tracker to fix a while back but was flabbergasted at the rates on offer?
3.49% (BBBR + 2.99%) variable until 31 May '14, then fixed at 4.29% until 31 May '17
£1299 fee. 70% LTV

Surely thats a terrible set of rates.

You can fix for 5 years at ChelseaBS at 3.19% so that blows even the Woolwich tracker portion out of the water from the get go.....not to mention their 4.29 follow on fix!!
OK I know there is a fee at Chelsea of £1500.

Am I missing something with the tracker to fix? Or is it just terrible? I dont see any positives just worst of both worlds not the best of either.

chewback wrote: »

Rates are going to be low for at least another 2 years so is yo do look at a fixed rate you need to look at 5 years. Accord and Woolwich have 2 year tracker that then go to a fixed rate for the next 3 years which seems a good compromise.

dimbo61

If you want to clear the mortgage asap then look at a 5 year fixed offset mortgage?
YBS have deals from 3.59-3.79% ( depends on fee) and how big a loan you want.
Many people on the MFW board use offset mortgages as a way to clear the debt asap.
This gives you 5 years security and chance to overpay or build up savings

Morgage_Confused

thats what I have my eye on for my next remortgage, i really want to offset....just trying to justilfy the difference between chelsea 3.19 and their offset at 3.39%

the offset is £960 more expensive for me over the 5 years.

dimbo61

£20 a month for the flexability of an offset mortgage,
We have had an offset mortgage for the last 6 years and 2 months and have reduced our mortgage debt by 75%.