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3yr or 5yr fix??? Advice please...
FluffyClouds
Posts: 18 Forumite
Hello
I am about to apply for a mortgage for the first time. I am buying a new build property using the help to buy equity loan scheme. The house price is £140K, I am putting down a 5% deposit, getting the equity loan for 20% and a mortgage for £105,000. Obviously, I am restricted to the lenders supporting HTB of which many are not offering 5yr fixes. I was thinking of going for a 3yr fix. The IFA I have seen has recommended applying to Skipton BS for the mortgage as they are offering a 3yr fix at 3.19% with no booking fee, no valuation fee and £500 cash back. As I should still be able to afford to save about £800 a month my plan is to save up the money to pay back the equity loan within the first 5 years thus paying no interest on that part. I think this should be achievable with the assumption that the house value would increase by about 5% each year. However, the more I think about it, the more I think I might be better to go for a 5yr fix. I am concerned that if rates went up too much I would not be able to save up as much and may not be able to afford to pay the loan off within the 5yrs which I would really like to be able to do.
Skipton are offering a 5yr fix at 3.79% which would mean my monthly payments would be £35 more but I would not need to worry about rates going up for longer and would be able to ensure I can pay back the loan.
I just wondered what people's views on this are - should I go for a 3yr fix or is a 5yr fix a better option given my scenario?
I am about to apply for a mortgage for the first time. I am buying a new build property using the help to buy equity loan scheme. The house price is £140K, I am putting down a 5% deposit, getting the equity loan for 20% and a mortgage for £105,000. Obviously, I am restricted to the lenders supporting HTB of which many are not offering 5yr fixes. I was thinking of going for a 3yr fix. The IFA I have seen has recommended applying to Skipton BS for the mortgage as they are offering a 3yr fix at 3.19% with no booking fee, no valuation fee and £500 cash back. As I should still be able to afford to save about £800 a month my plan is to save up the money to pay back the equity loan within the first 5 years thus paying no interest on that part. I think this should be achievable with the assumption that the house value would increase by about 5% each year. However, the more I think about it, the more I think I might be better to go for a 5yr fix. I am concerned that if rates went up too much I would not be able to save up as much and may not be able to afford to pay the loan off within the 5yrs which I would really like to be able to do.
Skipton are offering a 5yr fix at 3.79% which would mean my monthly payments would be £35 more but I would not need to worry about rates going up for longer and would be able to ensure I can pay back the loan.
I just wondered what people's views on this are - should I go for a 3yr fix or is a 5yr fix a better option given my scenario?
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Comments
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Depends on your circumstances unfortunately and how you view the market changing in the next years. You may be in a high risk job where you won't have a guaranteed salary in 3 years. In which case 5 years is better.
Its a very personal question I think and only you can answer0 -
Blimey 3.79% 5yr fix using HTB !!!
We are on 3.99% 5yr , but that's sticking in 15% of our own cash !!
And George says he's not trying to juice up the housing market ?
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Our views are not relevant as we do not know your case.
Your IFA is engaged to provide this type of advice and that is where you should be going with this query.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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