Fixed Rate Mortgage Tie In - Requesting Advice!!

stephen34125

Hi all,

I would really appreciate peoples opinions on the following;

Myself and partner purchased our house pretty close to the peak of the market in 2006, tied into an interest only mortgage for 3 years at 5.69%.

Ideally we planned to move on after we got married in 2009 and the market plummeted therefore our house is in negative equity and is probably worth 1/2 of what we paid for it.
We have started a family and our house is unsuitable but we have no choice but to stay here.

We have sat on the base rate (standard variable rate) again paying interest only after our 3 year deal lapsed overpaying when possible. Now as the rates are beginning to rise we have few options but to stay with our current lender and tie into a full repayment mortgage;

Option 1 - 3 years at 4.55%

Option 2 - 5 years at 4.99%

Any advice is appreciated - thanks

Joe_Bloggs

What is the term of the mortgage ? If it is for 25 years plus then the repayments strategy is easier to handle than just 20 years or less . There is more interest to pay by delaying repayment of capital borrowed over time.

I can't believe that your house price is 50% of what it was in 2006. I am not saying it isn't true either.

J_B.

Lokolo

What LTV are you looking at? They are quite high.

dimbo61

The OP is in Negative equity as he states in his post.
I have recently finished a 5 year fix at 4.74% and we put down over 50% deposit so I would go for the 5 year deal and be in it for the long term.
you cant afford to move and have no equity so take the long term view and with luck you will have 75% LTV in 5 years time.
Only my views

property.advert

5 years at 4.99% is still well under the historic average. It is a better bet than 3 years at 4.55% as the likelihood of prices doubling in 3 years to get the OP out of negative equity is near zero and rates are possibly going to be higher then than now.

Joe_Bloggs

These are the change in house price values from Nationwide
For Q1 2006 to Q1 2012 for a property of 100K in 2006 . I have only shown those that have fell in value. These are only averages etc. and their could be depressing local circumstances

Greater London -16.23%
Outer Metropolitan -8.78%
Outer South East -4.27%
Scotland -9.52%
Southwest -0.72%

If the OP is going to move before the 5 years then there could be large early repayment charges to pay. There is also the question of follow on rate.
J_B.