First Time Buyer's question

movilogo

Hi Guys

I am going to buy a property for the first time.
Naturally I'm very much confused from whom to take the mortgage.

From various sources, I've gathered following information, please guide me if they are ok to follow.

I shall be taking a 25-yr mortgage. I've good credit history. Willing to borrow ~£120k + £10k can put down as deposit.

I understand that no one gives 25-yr fixed term mortgage and rate varies as with Bank of England base rates.

So, I think I need to go for lowest APR rate for as much fixed time as possible.
When that time is reached, re-mortgage and take the lowest APR available then again.

Am I correct?

MortgageMamma

No you are not correct!

There are thousands and thousands of mortgages that will fix your payments for a certain term

the usual terms are 2, 3, 5 or 10 years but there are also mortgages available for 15, 20 and 25 years. During this time, your payments would remain the same every single month until the end of your selected time.

Does this sound like what you are looking for?

MortgageMamma

herbiesjp

Just to add

If you are looking for the best deal over a certain period of time, you would not look at the APR, as the APR looks at the cost of the mortgage over the 25 year period and assumes you will stay with the same lender on their standard variable rate - which you should not do.

You would need to compare the true cost of schemes over the fixed rate period you select, say 5 years for example

Also you can have mortgage terms longer than 25 years, just in case affordability is an issue, it can help reduce the monthly cost for you

HTH

movilogo

Ok, say I'm going to a 5-yr fixed term mortgage initially. After 5 years, I can find a cheaper rate elsewhere. So, I shall move to a different lender. And this will continue. Is it not the way most people pay out the mortgages?

If so, how do I decide whether my initial tie up period is good for 2 years or 5 years??

benjdr

movilogo wrote: »

Ok, say I'm going to a 5-yr fixed term mortgage initially. After 5 years, I can find a cheaper rate elsewhere. So, I shall move to a different lender. And this will continue. Is it not the way most people pay out the mortgages?

If so, how do I decide whether my initial tie up period is good for 2 years or 5 years??

As an added question, how much does changing lenders after the fixed term generally cost? (Or where can I find out)

herbiesjp

movilogo wrote: »

Ok, say I'm going to a 5-yr fixed term mortgage initially. After 5 years, I can find a cheaper rate elsewhere. So, I shall move to a different lender. And this will continue. Is it not the way most people pay out the mortgages?

If so, how do I decide whether my initial tie up period is good for 2 years or 5 years??

Indeed people fix their rates for a certain period and then look to get another competitive deal at the end of the fixed rate

Whether or not you want to fix for 2 or 5 years has to be down to you and what your plans are for the property, and what your affordability is like and what your attitude to interest rates is.

Every person is different and your reasons for choosing a particular deal will be different from someone else

herbiesjp

benjdr wrote: »

As an added question, how much does changing lenders after the fixed term generally cost? (Or where can I find out)

That will depend on the exit/closing/deed release fees (grouped under Mortgage Exit Administration Fees) of your current lender which can be found on your offer letter.

Other fees will depend on the mortgage deal that you move to and they will be on the illustration that you get from the lender

HTH