5 yr fix at a high rate or 2 yr at a lower rate?

Guy_Montag

Thought about getting a 10 year fix? I think that might be a little cheaper. Just make sure it's portable.

Bargain_Rzl

Guapa1 wrote: »

Not at all Peter. I have worked out that I can afford a mortgage of 150k over 30 years. Apart from the £200 a month for my loan and £110 a month to run my car, I have have no other outgoings.
As I am looking to purchase near the London area, I'll be looking for a flat, so I am factoring the fact I'll have to pay ground rent into the equation too.

Don't forget to budget for a monthly service charge too

Guapa1

... And council tax and the rest of it. Believe me I'm not doing this willy nilly. Guy of all the brokers I've seen, no one has offered me a 10 year fix. My salary is also quite awkward and not a lot of comapnies are willing to take a risk on me. I refuse to lie and get out of my depth to a get a better deal.

Bargain_Rzl

I only singled out the service charge because it's an expense which you won't have had to deal with while renting (unlike council tax) and is likely to be a LOT more than ground rent which is the only thing you mentioned.

RHemmings

dannyboycey wrote: »

I don't get the continued obsession with fixed rates. FTB'ers are either overly cautious or they have a 'live for today' mentality. You may be better with a discounted or tracker, but it depends on whether you can cope with uncertainty and risk. Rates could go to 6.25% (6.5 at the most) over the next couple of years but that's it in my opinion.

On what basis do you say that rates won't go up to more than 6.5% in the next five years?

pcwilkins

Guapa1 wrote: »

Thanks Peter, I am thinking long and hard about this, I've just had enough of renting. I've had some awful landlords, and now I've finally settled into somewhere, the owner is selling up. I just want somewhere to call home you know?

I know exactly what you mean. Just remember that a £150k mortgage actually means you have a £320k debt. That would scare me more than any amount of awful landlords!

Whatever you decide, hope it all goes well.

Peter

homer_j_3

unless you can guarantee that you will be at the property for the next 10 years, I would think hard about a 10 year product. Portability is not guaranteed and that the lender can say "no" to move your mortgage to the next property very easily.

There is 1 product that I am aware of that offers 10yr fixed with only a 5 year tie in but I couldn't say if its right for you.

When choosing your mortgage you need to work out what is important for you:

Term of the rate you want - you should consider at what point you would feel uncomfortable being tied with your next mortgage - is it likely you will need to move house through work or personal circumstances in the next 2, 3,5,7,10+ years.

Product type (fixed, discount, tracker, variable, capped etc) - Do you want control over your mortgage payments or can you live with some variance?

Term of mortgage - longer terms = smaller payments but more interest overall. Shorter terms = larger payments but less interest overall etc. I would always suggest working to budget and getting the shortest term possible for the money you have. You need to consider protection for your mortgage with this budget too.

Do a proper budget plan - get your bank statements out and look at what you are spending on what. DD's in one section, Cash/Switch transactions in the next - try and put accurate figures in as this will ensure no nasty suprises later on.

Finally - ask for a list of all the lenders that your adviser has access to - don't be fooled by whole of market tag. A lot of wom adviser work off a preferred list of lenders to make sure they actually have a decent amount of lenders to choose from.

HTH

Time2Go_25

pcwilkins wrote: »

I know exactly what you mean. Just remember that a £150k mortgage actually means you have a £320k debt. That would scare me more than any amount of awful landlords!

Whatever you decide, hope it all goes well.

Peter

No it doesn't, you have £150k of debt, you may pay more back over the lifetime, but your debt is still only £150k, if the house was sold tomorrow you'd only have £150k to pay back not £320k

Guapa1

Thank you homerj. Your advice is appreciated.

ixwood

Guapa1 wrote: »

Apart from the £200 a month for my loan and £110 a month to run my car, I have have no other outgoings.

Yet. ;-)

Don't forget to budget a few hundred a month for bills and tax.