new member requires some advise on mortages and buying

GEORGYPORGY

hi there all,
my partner and i would like your advise and knowledge on some aspects of buying our council house,
we have gone through the usual steps towards buyig our council house, we have received our offer price from the council and are advised that we are entitled to the maximum discount available in this particilar area,(£38000.00 discount on a council valuation of £150000), we are now in a postiton of shopping around for a suitable mortage that we feel is suitable for our needs, we are not looking to borrow extra monies and feel that it would be a good idea to keep fees, and any additional borrowing to a minimum.
we are both self employed and require a self-cert mortage, there seems to be quite an array of self-cert mortages available, there also seems to be a million and one "off the high street lenders willing to offer a mortage.
my fiscal history is a single default / dispute from 2002 and my partner has a nice clean (almost too clean) credit history, we would like to know about a particular issue that has come to our intrest which is that of the 2 or 3 year fixed rate followed by the remortage.
following several meetings with various brokers we have been quoted several mortage rates, the last of which is of intrest to us.
our potential broker has found us a mortage not of the high street but offered by a high street lender, the lender is abby and the the mortage is for a fixed rate of 2 years, our queston is are we able to remortage after the initial 2 year fixed rate,thus vastly reducing the mortage repayments after the 2 year period, our council discount does not allow us to sell the house should we choose to for a minimum of 5 years, so we would like to take a 2 year fixed mortage followed by a further 3 year fixed rate,a total of 5 years fixed.
this mortage would be a repayment mortage, with an initial fixed rate for 5.39% for 2 years thus 24 payments of £705.49 followed by 275 payments of £854,
as i mentioned we would like to remortage after the 22nd month to reduce mortage repayments following a consistant period mortage repayments
what possible pitfalls would and are we likely to expect?
are there further questions we should be asking?

CB1979_2

yes once out of the fixed term, you can remortgage for a lower rate than Abbey's SVR.

why don't you get a 5 year fixed rate mortgage to start with?

if you do this make sure the mortgage is portable if you are wanting to move.

dwsjarcmcd

5.39% is a great rate in the current market, would I be right in assuming you applied for this several weeks ago? If I am right and you try to revert to a 5 year fix, you will be looking at the prevailing rate today, somewhere between 6% and 6.5% depending on fees. Stick with the rate you have on your 2 year deal.

Please don't think that you will 'vastly reduce your mortgage payments' after 2 years because the rate you pay now may not be what you pay in a couple of years, even if you do take another product from the Abbey or remortgage away from them. You can do either at the end of 2 years, rather than going onto Abbey's standard variable rate.

David