Help!!

tony863

Hi All,

I'm in the process of buying my first house and I have until Monday to decide which mortgage to take.

I am borrowing over and above the amount the property is worth and therefore don't get such a great rate.

I have narrowed it down to three choices:

1. 2yr fixed @ 5.85% = £1015 per month

2. 2yr fixed @ 6.09% = £1044 per month with £1000 cashback

3. 3yr fixed @ 6.19% = £1056 per month with £1000 cashback


I don't know which is going to work out the best and I don't know how the interest rates are going to go in the next couple of years.

Is it better to stay fixed for longer, or shall I go for two years? and even if i go for two years, shall I go for the thousand pounds cashback, or not???


HELP!!! Please, any advice will be most welcome

Amitoocautious

What are the fees on those? As this could mean a higher real interest rate if its like 1 k in fees

Why are you borrowing more than the house is worth

tony863

The fees are the same with all three so it doesn't matter in that way.

We have to borrow more to clear our debt and tie in a deposit. We did it through a "together loan" through Northern Rock.

I wish it could be different, but we will never have a deposit and we need to get on the market now.

Curly_Girly_2

If you need the cash to be able to pay for solictors fees or urgent remedial work on the house you're buying, then the £1k cashback is a good idea. However, as the previous reponse says, compare the fees on the mortgages because you may find you are effectively paying for the £1k cashback in the higher interest rate and higher fees and therefore it's only worth doing if you really need the cash. If you don't, then stick with the lowest interest rate.

Amitoocautious

Blimey that is well risky IMO. Even the BOE have stated house prices are unsustainable and you are already starting in Negative Equity. Why could you not save a deposit or at least clear your debts.

Why do you need to get on the market now?

If you must buy then bear in minds the shorter the term is the more you will end up paying in fees as you have to pay again for another new mortage in 2 years

tony863

Yeah, thats a good point. I don't particulary need the thousand pound cashback, and I know it is all a big risk but I remember being convinced that the market would crash 5 or 6 years ago. i pulled out of buying then and lost over 60 grand in equity.

sometimes you have to take a risk and i suppose that i am just willing to take it. i don't like it, but I have to do it.

When you re-mortgage, what kind of fees do you have to pay?

kissingthepink

tony863 wrote: »

Yeah, thats a good point. I don't particulary need the thousand pound cashback, and I know it is all a big risk but I remember being convinced that the market would crash 5 or 6 years ago. i pulled out of buying then and lost over 60 grand in equity.

sometimes you have to take a risk and i suppose that i am just willing to take it. i don't like it, but I have to do it.

When you re-mortgage, what kind of fees do you have to pay?

When I remortgaged from my Northern Rock "together" mortgage on to one of their tracker mortgages I think that the fee was something like £700. I nearly fell on the floor, but then they gave me £750 cashback or thereabouts so it cost nothing in the end. I also had the option of paying the cahback straight back into the morgage. They did not charge any other fees (this is because, I presume, I was remortgaging with the same lender - otherwise it also would have involved legal fees and valuation fees). The whole remortgage with Northern Rock was done in one phone call and took a few weeks to complete. They seem to make it very easy as they obviously want to keep your business.

mchu6am4

Quote: If you don't take a risk, you risk even more!

keeperbear

Amitoocautious wrote: »

Blimey that is well risky IMO. Even the BOE have stated house prices are unsustainable and you are already starting in Negative Equity

If you factor in fees, stamp duty etc, EVERYONE who buys a house starts out with negative equity. However, you start to recoup this in rent savings from the very moment that you move in!

As for prices being unsustainable, they have been saying this for three years now. If you wait for a crash, you may be waiting for years. I have owned for years, but bought immediately before a house price crash. Guess what? I now have substantial equity, but couldn't care less about how much my house is worth. The OP should go ahead and buy.

In terms of the morgage product, I would plump for option 2. The cashback could come in handy for DIY etc.

tony863

Very much appreciated keeperbear,

everyone is soooo negative about the property market at the moment and I'm sh*ting myself, but at the same time,

"He who dares Rodney, he who dares";)

bs0u0128

crikey that means u must have at last 12grand income every yr for x amount of yrs? hope ur not too old!