Mortgage advice - fixed or variable rate? Over 25 or 30 years?

olympicsmummy

Ok so I've done so much research and feel more unsure now than before I did my research as there's so much info and so many options out there.

Our basic stats are I am 30, partner 37. We have joint income before tax of £52 000. We have deposit of £50K and house we are buying is £260 000

Ideally we don't want to pay more than £1100 a month on repayments.

1. Should we go for fixed or variable?
2. Over 25 or 30 years?
3. What interest rate is a good deal? 3?
4. which bank/bs etc to go with??

highguyuk

2 things.

This question would have been better on the mortgage board rather than housing buying.

If you're not sure about some of these basic issues, I think you go and see an independent mortgage broker.

G_M

olympicsmummy wrote: »

1. Should we go for fixed or variable?
2. Over 25 or 30 years?
3. What interest rate is a good deal? 3?

1) Do you want the security of knowing that for the next 2, 3, whatever, years, your mortgage payments will not change. You can budget accordingly.

And are you prepared to probobly pay a bit extra for that certainty?

What do you think interest rates will do? If you think they will go up, fixing could save money. If you think they will NOT go up, fixing may be more expensive

2) The longer the Term, the lower the monthly payments.
The longer the term, the more it will cost you overall to pay off the mortgage.
A 15 year mortgage is 'cheaper' overall than a 25 or 30 year mortgage.

3) the lower the interest rate, the 'better' the deal, unless there are other costs (eg high 'arrangement' fee; penalties for early redemption/over-payments etc)

ACG

Ive not checked whether the monthly repayments you have said are realistic or not, but it looks like it should be ok.

1. Should we go for fixed or variable? - This depends entirely on what you want. Usually fixed rates are higher than variable rates - but you have the security of being able to budget for the fixed period.

2. Over 25 or 30 years? Again, this is down to your preference. The longer the period the lower your monthly repayments will be, but you will pay more in the long run.

3. What interest rate is a good deal? 3? Depends on your circumstances, rates of 3% are achievable, rates of 2% are achievable, but not to everyone. Also a lot of the lower rates come with higher upfront fees - so sometimes it can be a toss up as to whats more important.

4. which bank/bs etc to go with?? Cant really be answered by anyone on here, as it depends on your circumstances.

It looks like im being awkward, but these questions are all very open and its difficult to give more accurate answers. If your questions are this vague then its probably worth sitting down with a broker. They can find out what is important to you and make a recommendation based on those.

There is nowhere near enough info on this thread to be able to give a more accurate answer. Anyone qualified to do so wouldnt be able to give specific advice on here anyway as its a regulated industry and without having all the info we need its impossible to say.

Bella73

Can only comment on the length of term, I am 40 and we were only "allowed" 25 years even though my OH is four years younger.

anotherginger

I'm no mortgage expert but have managed to get one within the past year.

I would worry about a monthly payment of 1100 on your joint income. You are trying to borrow 5x your salary which is really pushing it. Our joint income is slightly more than yours but we didn't really want to go above 600 per month in case one of us lost our jobs - quite likely in the current climate as we're both in public sector. This was the maximum that would be doable if we only had the lower salary available.

We fixed for 5 years, 25 year term, 4.19%, and had 25% deposit.

My best idea would be for you to go through a few mortgage calculators online to see what is possible. I don't have kids so not sure how they would affect your application if you have any.

sharpe106

Bella73 wrote: »

Can only comment on the length of term, I am 40 and we were only "allowed" 25 years even though my OH is four years younger.

As they expect most people to be retired by then, however with the new age for retirement going up it is probably something they will look at in the future

sharpe106

You seem to be borrowing probably about the max that you can so it will be a struggle, play with the calculator a bit. Is this the first time you have owned a home? as if it is you might be best starting with a longer term for first few years so that you can get your budgeting sorted and build up a bit of an emergency fund then in 3 years times relook again at paying more when you know what you can afford.

ACG

anotherginger wrote: »

You are trying to borrow 5x your salary which is really pushing it.

£260k purchase price, using a £50k deposit. Its marginally over 4x income. 4x income isnt a problem.

£1100 unless they have big debts/commitments shouldnt be a problem.

My mortgage was just above 50% off my take home pay when i first took it out. Theirs will be just below, so i cant see £1100 being a problem.

olympicsmummy

Thank you to those who've posted very helpful responses :-)

I dont think the amount we're borrowing is too high??

We are only borrowing very very slightly over 4 times our salary.. (joint income before tax is £52 000..in fact its actually £53 000 from july) deposit is £50 000 and house is £260 000.

I am not at all worried we cant afford mortgage. We've actually been offered over £210K by the bank. We currently pay £950 on rent and do not struggle at all.

Worst case scenario my parents would help out.

And yes its our first owned home. I think longer term seems sensible then.. over 30 years to begin with (if we're allowed)

geoffky

Is it just me? but when i see anything over 25years i shake my head in bewilderment...The name of the game is to get rid of a mortgage as quick as you can or never have one in the first place.