comparing mortgage offers. help!

lolypopcorn

After much searching on the internet I decided to visit the 2 banks I use today to enquire about mortgages. I am finding it hard to decide between the 2 as I'm not sure if I understand them correctly, both are fixed rate.

I'll post the details below and would much appreciate it if you would say which one you think is better. I have been primarily looking at the fixed rate APR but should I also be considering the rate when the fixed term ends?

Borrowing 40,000 over 20 years on a 2 years fixed rate offer.

1. HSBC, fixed rate 3.79 until december 2014.
Rate then changes to variable rate currently 3.94%
Overall 4.0% APR.
Fee free and free valuation.
Monthly repayment 237.99.
Problem with this is that I am currently on a temporary contract which should soon be made permanant, but HSBC will only go ahead if my employer guarantees my permanant position, no opportunity for any other guarantor such as parents.

2. Halifax, fixed rate 3.89 until feb 2015.
Rate then changes to variable rate currently 3.99%.
Overall 4.1% APR
£245 fee and £240 valuation fee.
£1150 cashback (for being first time buyer and customer)
Monthly repayment £239.33 (plus £1.02p/m for fee at 0% interest).
Halifax are willing to provide my mortgage immediately without requiring a permanant contract or guarantor.

Thoughts?

GMS

One you are ineligible for so surely that makes it not one to compare??

lolypopcorn

GMS wrote: »

One you are ineligible for so surely that makes it not one to compare??

Sorry I should have explained myself a bit better. Yes I am not eligible for it at the moment, but I am not actively house seeking either. At the moment I am just seeing what position I am in with regards to mortgages.

I should have said: if I find a house within the next couple of months after becoming permanant which mortgage would be better. Sorry for any confusion

Cara79

lolypopcorn wrote: »

Sorry I should have explained myself a bit better. Yes I am not eligible for it at the moment, but I am not actively house seeking either. At the moment I am just seeing what position I am in with regards to mortgages.

I should have said: if I find a house within the next couple of months after becoming permanant which mortgage would be better. Sorry for any confusion

To be honest it makes no difference. If uv not yet found a house, by the time you do, it is highly likely that these rates will no longer be available. So seems a waste of time at the moment.
X

kloana

If you magically took a mortgage out tomorrow, started paying in November, and paid them both until December 2014 (the HSBC end date), you have paid a smidge less to Halifax than to HSBC, assuming the Halifax cashback deal worked out OK (sorry, no idea how these deals actually work, and how the cashback is actually applied). The difference, though, would be a few hundred pounds, over the whole term.

Disregarding cashback, both deals work out virtually identical. Halifax would be a very small amount more expensive than HSBC. The end-term Standard Variable Rates are also highly similar (0.05% separating them, equating to very little difference in monthly payments). Unless I'm missing something, there really isn't much to seperate either deal.

However, the Standard Variable Rate is exactly that...variable. They're based on the market and prevailing rates now. One or both of these rates could change tomorrow. If you got to the end of either 2-year fixed rate deal and weren't happy with the SVR rate that you'd automatically be put on to, you wouldn't necessarily be tied to either bank, and could shop around for a remortgage in much the same way that you're shopping for a FTB mortgage.

kloana

Just food for thought, if you were on either SVR right now, for your full £40k balance, you'd pay £1.05 per month more for the Halifax deal.

But predicting what either SVR will be by 2014/15 is crystal ball stuff