variable or fixed, I want to try to work out if I'm going to lose money...

stolt

Hi i've sold my house and found another (which they have accepted an offer of 414K) I will need a mortgage of 185K. I was going to go for a fixed rate deal for 5years, but someone has mentioned that it might be worth a look to see how much i'd pay if the rate went up and down over 5 years compared to the fixed rate, he said himself although he's no expert that he believes that the rate will go up a quarter percent and then start to drop again. The fix rate deals seem to be about 5.4%.

I know nobody can be sure about this, but do you think with the current housing situation that it is possible that the rate will drop after the next rise,

thanks

absolutebounder

Fortunately its not just house price inflation that affects the interest artes. Its general inflation so I would think rates might rise more than .25% but no one really knows what will happen

HelpWhereIcan

I always feel that it is never a good idea to try and guess what the money markets are going to do.

If you need the security of knowing that your payments will stay the same making it easier to budget (or if your budget won't absorb up to 1% in rises) then you should really be looking at a fixed rate.

If you are happy that the interest you are paying could go up by up to 0.5% but want to be able to benefit from any falls interest rates you might want to consider a capped rate.

There are enough pundits who agree with your friend, but there are also quite a few who think rates could go up by another 1% over the next 2 years. If I knew who was right I'd be very rich.

Swap rates could be argued to agree with your friend.

However, only you know what risk you are prepared to take with your home. If you need that security of being sure - go for fixed. Happy to take the risk - go for variable. Half way house - Capped is an option.

littlesos

Hi,
We were wondering this too. We've just gone for a fixed rate of 4.95 for 10 years.

I did a few calculations and if we went for a fixed rate shorter term, 5 years at 5.1% the interest rate at the end of the 5 years would have to be about 3.5% to be a better deal than the 4.95% fixed for 10 years. Now personally I think it will be a while before banks drop their rates to 3.5% on mortgages so we are taking the gamble.

We are taking on this mortgage after being mortgage free for a while, so it was a priority that we knew what we would be paying for a while, and 4.95% seemed too good a rate to miss.

homer_j_3

When you have worked that out, will you give me the lottery numbers lol..

Too many variables and you would have more luck winning the lottery than predicting accurately all the variables for the next 5 years in my opinion.

Why not look at a 5 year fixed rate with no tie ins? If rates start to work in your favour, i.e. rise, you will be ok knowing you are fixed. If rates drop significantly then you can jump ship whenever you want for a few hundred quid.

JoeK_3

homer_j wrote: »

When you have worked that out, will you give me the lottery numbers lol..

Too many variables and you would have more luck winning the lottery than predicting accurately all the variables for the next 5 years in my opinion.

Why not look at a 5 year fixed rate with no tie ins? If rates start to work in your favour, i.e. rise, you will be ok knowing you are fixed. If rates drop significantly then you can jump ship whenever you want for a few hundred quid.

Excellent suggestion Homer. We in the industry are expecting a rate increase in the next few weeks. Get into a good fixed rate with no penalties as soon as you can.

JoeK

homer_j_3

thanks for the support lol.

Hows business - Im run off my feet at the moment!!!

stolt

thanks for all the replies as most have suggested we have not got the flexibility if the rates rise, interested in decent fixed 5 y rate with no tie ins. I dont suppose your will offer any suggestions or places to look because that is your work. but if you could give me a nudge in the right direction it would be most appreciated.

thanks
rob

homer_j_3

I have mentioned it in another post the one that comes to mind - not brilliant rate at 6.15% but with absolutely no set up fees and tie ins - The coventry looks a good option. It was 5.99 upto about 1 week and a half ago - with swap rates on the down it may come back down again.

I would go and find a whole of market broker to see if there is anything better for you as I work from 40 different lenders and dont have access to whole of market.

JoeK_3

stolt wrote: »

thanks for all the replies as most have suggested we have not got the flexibility if the rates rise, interested in decent fixed 5 y rate with no tie ins. I dont suppose your will offer any suggestions or places to look because that is your work. but if you could give me a nudge in the right direction it would be most appreciated.

thanks
rob

Have a look in all the threads, most have been about fixed rates and a number of different lenders and rates have been mentioned.

JoeK

JoeK_3

homer_j wrote: »

thanks for the support lol.

Hows business - Im run off my feet at the moment!!!

Hi Homer, I'm not an active mortgage adviser as I own a national whole of market mortgage brokerage. We are busy at the moment but we self generate so its in our own hands.

What about you?

JoeK