Mortgage Rate Help

Kate_A

I have been offered two different mortgages as follows:

2 year fixed at 2.99% with a £999 fee

3 year fixed at 3.29% with a £999 fee

What would you go with??????

Thank you :beer:

HappyMJ

Kate_A wrote: »

I have been offered two different mortgages as follows:

2 year fixed at 2.99% with a £999 fee

3 year fixed at 3.29% with a £999 fee

What would you go with??????

Thank you :beer:

Depends on your circumstances. Which do you prefer? Are you going to make the same repayment on either or are looking to have reduced repayments.

kidmugsy

How much are you borrowing?

EDIT: ah, if it's £185k then the three-year mortgage costs you an extra £555 p.a., so £1110 over two years. On the other hand you won't have to find another £999 in two years time. Whether the three year mortgage will be cheaper in year three than the new mortgage you would otherwise need to set up, heaven knows. That's the gamble, isn't it?

Can you be confident of not wanting to move house in the next three years?

Thrugelmir

Kate_A wrote: »

I have been offered two different mortgages as follows:

2 year fixed at 2.99% with a £999 fee

3 year fixed at 3.29% with a £999 fee

What would you go with??????

Thank you :beer:

The amount you are borrowing makes a difference.

What are the follow rates after the fixed terms end.

Kate_A

Sorry, should have given more detail. Borrowing £185000 rate reverts to current variable rate of 5.54% after the term at which point we would look to remortgage.

Kate_A

HappyMJ wrote: »

Depends on your circumstances. Which do you prefer? Are you going to make the same repayment on either or are looking to have reduced repayments.

Good question. I was forgetting I could set my payment for higher than they say. Not sure which I prefer really just didnt know how to go about working out which one costs more (my brain is addled just now - I do normally have a good handle on these things!)

I suppose what I really need to consider is do I think interest rates will rise and should I tie into a three year deal just now??

Kate_A

I was reading the wrong screen!!! I am an existing customer so the two on offer are:

3.25% for 2 years. No fee.
3.35% for 3 years. No fee.

I am thinking the 3 year option? Very little difference and more security??

AFK_Matrix

Personally I would go with the 3 year deal with those rates. As I don't know if you know but the Bank of England Base rate is going to be going up over the next few years so if your on a tracker your monthly payments are going to go up where as on a fixed you won't have that problem until the deal ends.

One thing to think about on a fixed is that you may have a sharp raise in rates when you come to remortgage as the fixed deals then will be base on the new base rate as will the trackers and this maybe a 3%+ jump in rates.

Kate_A

AFK_Matrix wrote: »

Personally I would go with the 3 year deal with those rates. As I don't know if you know but the Bank of England Base rate is going to be going up over the next few years so if your on a tracker your monthly payments are going to go up where as on a fixed you won't have that problem until the deal ends.

One thing to think about on a fixed is that you may have a sharp raise in rates when you come to remortgage as the fixed deals then will be base on the new base rate as will the trackers and this maybe a 3%+ jump in rates.

Yep, I think that is where my gut is taking me now as there is so little difference in the rates. I think I will also set my payment a bit higher too so when we do come off the fixed rate we wont see too much of a difference. We are currently on 5.44% (it was a self build mortgage hence the high interest rate) at the moment paying £1145 per month so I am thinking of making the payment £1200 per month. We could make higher overpayments but we are still considering other ways to invest our money just now so dont want to commit too much. I wonder if I should just get them to take the actual payment amount by DD and then a standing order for the rest that way if I need to divert the overpayment elsewhere I can easily change it. All these ramblings going on in my head, sorry!!

Thank you all :T

kingstreet

Kate_A wrote: »

reverts to current variable rate of 5.54%

I would get the hell away while you can.

What happens in future if there are no new customer retention products and a change of circumstances means there's nothing open to you but that 5.54% or what it has increased to?

I've been steering clients away from Accord due to its 5.99% SVR. Why should you risk that for 20+ years for a rate which might be 0.2% or 0.3% lower for only the first couple of years?

getmore4less

Definitely time to look for better rates or work hard to make that happen.

£185k over 24y 3/4m, ok you want to pay £1200 that makes it easy.

http://www.whatsthecost.com/mortgage.aspx
1. 3.25% for 2 years. No fee.
2. 3.35% for 3 years. No fee.
3. 5.44%

After 2 years
1. £167,692 (save £366)
2. £168,058
3. £175,861
assuming rates don't change 1 reverts to the 5.44%
after 3 years
1. £162,281
2. £159,152 ( save £3129)
3. £170,905
Is the small saving over 2 years worth the risk you can get another deal then potentially with fees, where the 3 year has the potential of £3k savings if you get stuck with the current lender and no new deal.


I would find a new lender or the 3 year deal and try again for a better lender then

What's the ERC's on the 3 year deal that will determine if a change during term is ever worth looking at.