100% mortgage worries

Montymoo_2

Can somebody please help?

We want to buy our first house but due to the fact that this is only a recent descision we will have to have a 100% mortgage. I have been in contact with a mortgage broker but he seems to be trying to push us towards a 5 year fixed rate mortgage at 5.89% is this a good deal?

Also i am not sure if i have a default on my account as there was a crossover period when i moved jobs last year so my graduate loan repayment was 21 days late, is this classed as a default?

Mr_helpful

Graduate loans dont usually show up on credit files and 21 days late is not a default. As to whether his rate is good or not depends on the type of mortgage you wanted but as 5yr fixed goes it seem ok to me

Montymoo_2

We dont really want to stay in the area for 5 years, my partners dad keeps telling us to go for a varible rate as he doesnt believe the interest rate will increase by that much....Im so confused

full-time-mum

Before signing up to 5 year fixed, check out the tie-ins, early repayment penalties and whether you can take the mortgage with you if you need to move.
Are you tied in after the 5 years? We got caught out on a 2yr fixed with 3 year tie in afterwards on standard rate - never dared to work out how much that cost us over all.

My brother and wife moved with a tied for 5 years deal and split up 18 months later - cost them £1000s in penalties.

5 years doesn't sound long but anything can happen.

What if you are made redundant and can only get a job the other side of the country?

I don't want to sound pessimistic but you might as well learn from our mistakes!!!

Nothing wrong with 5 year tie-ins, just so long as you go into them having considered the consequences.

Montymoo_2

thanks full time mum, the reasons you stated are exactly why I dont want to be tied to a 5 year fixed rate

I think its back to the drawing board :rolleyes:

sarah_elton

Most economists are currently predicting a rise to 5.5% within the next few months, then a pause at that for at least a year. But if inflation fears pick up it could still go higher in the next couple of years. The main point is, they're not very likely to drop, at least in the next 12-24 months, and if the base rate is 5.5% and you're fixed at 5.89%, that sounds pretty good to me.

You could ask if that rate is available for different terms, e.g. two or three years. I took a three year fix at 4.99% in January last year, also a 100% mortgage. I like the fact I know exactly what my payments will be during that period. The first year in my place has flashed by, being tied to it for another two feels fine. I could have fixed for 2, 3 or 5 years.

It's a balance between the pro of certainty over your payments, and the con of being tied to the property.

Mr_helpful

You could get similar rates without the tie ins

Montymoo_2

thanks guys, i think im finally getting my head around this