Considering a 10 Year fix - Thoughts?

Cyberman60

notanewuser wrote: »

We went for a 10 year fix remortgage just before the crash in 2008. Rate of 5.5%ish but of no relevance due to it being an offset mortgage. Within 2 years it was fully offset and we haven't paid a penny in interest since.

It was important to us to know what our monthly payment would be for most of the life of the mortgage (20 years). We have the flexibility to re borrow up to the level of the original mortgage at the clock of a button if we so choose.

I have an offset also and use it as an equity release since most has been paid off since I retired. It costs me 40 quid a month at the moment.

andys15

I too am tempted by the nationwide deal. I have always had fixed rates until the last times as I am currently on 1.49% above the boe rate. My mortgage is currently £1690 per month and if I went in the fixed deal it will go up to about £1850. Some advise to just overpay the difference and stick where I am, but I think the nationwide deal won't be around for long. I can afford the interest to go up beyond 3.49%, but I don't to overpay what I can afford, as I also enjoy having spare money to spend on fast cars and girls( the wife).

quantumleap

andys15 wrote: »

I too am tempted by the nationwide deal. I have always had fixed rates until the last times as I am currently on 1.49% above the boe rate. My mortgage is currently £1690 per month and if I went in the fixed deal it will go up to about £1850. Some advise to just overpay the difference and stick where I am, but I think the nationwide deal won't be around for long. I can afford the interest to go up beyond 3.49%, but I don't to overpay what I can afford, as I also enjoy having spare money to spend on fast cars and girls( the wife).

I think if I was on 1.49% above the base rate I'd be inclined to stay where I was. The nationwide deal only begins to offer you and advantage if the base rate rise to above 2%. I honestly can't see that happening for a number of year yet - but who knows!

It is difficult knowing what to do. I fixed 5 years ago when I should have stayed where I was but the deal before that was very beneficial. I guess you have to make a decision at the time and just run with it!

getmore4less

Overpay on a lower rate can be significantly better than fixing when you crunch the numbers with various rate rise senarioes.

andys15

Well I just noticed the boe rate has stayed put this month. They are now predicting late 2015 for a change. I will then only have 9 years left on my mortgage and I don't want to increase the years. I am assuming I cannot have a 10 year fixed with only 9 years left. Hopefully rates stay below 2% for the next 4 years and then I can look at fixing for 5.

Cyberman60

quantumleap wrote: »

I think if I was on 1.49% above the base rate I'd be inclined to stay where I was. The nationwide deal only begins to offer you and advantage if the base rate rise to above 2%. I honestly can't see that happening for a number of year yet - but who knows!

It is difficult knowing what to do. I fixed 5 years ago when I should have stayed where I was but the deal before that was very beneficial. I guess you have to make a decision at the time and just run with it!

Likewise, I also believe that interest rates have to remain low for many years to come, not least because of the size of our National Debt (it has doubled in the past five years!!) and the current interest payments on that of around 50-60 Billion pounds annually.
Any rise in interest rates could make more borrowing unsustainable for the next government which is still running a 100 Billion annual spending deficit. :eek:

JimmyTheWig

quantumleap wrote: »

the question I'm asking myself is how likely am I to get an interest rate of 3.59% in 5 years time (if I take a 5 year fix). My own thoughts are that interest rates are likely to rise steadily and in small incriments in the coming years, making a 5 year fix of 3.59% in 5 years time unlikely.

But you wouldn't need to get a 5 year fix at 3.59% in 5 years time to break even.
Just looking at Nationwide you can get a 3.04% rate for a 5 year fix.
So on the face of it if you then pay 4.14% for the next 5 years you'll be breaking even.

But it is much more positive than that.
Because your remaining term is only 15 years, in 5 years time your balance will be significantly lower.
Which means (I think) that a rate of 4.36% in 5 years time would see you breaking even.

So the question is, do you see rates being more than 1.2% higher in 5 years time than they are now?


[And it would get even better if you overpaid each month to the level that you would be paying if you were on a 3.59% rate.]

quantumleap

JimmyTheWig wrote: »

But you wouldn't need to get a 5 year fix at 3.59% in 5 years time to break even.
Just looking at Nationwide you can get a 3.04% rate for a 5 year fix.
So on the face of it if you then pay 4.14% for the next 5 years you'll be breaking even.

But it is much more positive than that.
Because your remaining term is only 15 years, in 5 years time your balance will be significantly lower.
Which means (I think) that a rate of 4.36% in 5 years time would see you breaking even.

So the question is, do you see rates being more than 1.2% higher in 5 years time than they are now?


[And it would get even better if you overpaid each month to the level that you would be paying if you were on a 3.59% rate.]

Thats the how long is a peice of string question I suppose. I appreciate your feedback, thank you.

JimmyTheWig

quantumleap wrote: »

Thats the how long is a peice of string question I suppose.

Oh absolutely. If anyone on here could give a definite answer to that they wouldn't need to be on a MoneySaving website!

Personally I don't think the 10 year fix is enough in your favour (if at all!) to make it worthwhile tieing (sp?) yourself in for that long.
For someone who couldn't afford to be paying more than that in 5 years time it looks like a good deal, but for someone who is just looking for value I'd steer away.

stator

The bank's mortgage rates are essentially based on what the possible interest rates will be over the next X years. I don't think it's smart to try and out guess the bank.
Imagine yourself in 10 years time. The economy has been crap and interest rates have stayed at rock bottom. You fixed your rate and paid over the odds. Are you upset/annoyed with yourself?
Imagine yourself but instead the economy has gone from strength to strength, house prices have boomed, interest rates have gone up. You didn't fix your rate 9 years ago and have therefore missed out on a massive saving paying variable rates above 6%. How upset are you?

Personally I think the second scenario is less likely to leave you kicking yourself as you've just paid the standard / fair rates that everyone else is paying now.