How to find the best 5 year fixed rate?

bigchris33

Hi everyone.

The wife and I had our offer accepted for a house today. We're in the very fortunate and hard-won position of having about 195K saved in the bank (10 years of very, very hard saving), but still need a 25K mortgage (or loan?) to cover the difference. Agreed sale price is 215K. Our dream was to buy for cash, but we couldn't quite find what we want in that price range.

I've started researching where to find the best 5 year fixed rate mortgage for 25K.

Any pointers or suggestions would be most welcome

We're FTBs and looking to clear the debt as soon as possible.

worried_jim

Just get a loan for £25k, but you may want to have a chat with an independent mortgage adviser as well.

bigchris33

Thanks for your reply, worried jim.

We did look into a loan already. It has advantages of being much easier and quicker to organise when compared to a mortgage. But it does look like it'll be more costly than a mortgage overall.

We want to make sure that we're paying the lowest total amount of interest possible over the term of the loan/mortgage, whilst keeping our repayments under 600 pounds per month.

For example, I've calculated that we could take a loan over 36 months, paying about 760 pounds per month. Total repayable would be about 27.3K. So we'd be paying 2.3K in overall fees and interest costs.

However, over more than 36 months, the loan looks like a more costly option than a 5 year fixed mortgage? Is that right?

For a 5-year fixed mortgage 5 it looks like we could pay around 450 pounds per month for the term of the mortgage, keeping our payments lower. Overall costs look to be around 27.5 to 28K.

The online calculators and tools I've found don't make it particularly easy to make the comparison between one product and another and *importantly* to work out the overall cost.

I'm hoping to find an easier way to compare products, rather than having to plug everything into Excel myself. Any ideas?

worried_jim

Great saving Chris, well done with ten years sacrifice, I am impressed. I mentioned the loan as you said you wanted to clear it as quick possible.

Try-

https://www.moneysavingexpert.com/mortgages/best-buys/

malcolmffc

If you've saved £195k in 10 years then you are saving almost £20k a year. So could you just get a very cheap 2 year fix and aim to pay it off over that period?

amnblog

malcolmffc wrote: »

If you've saved £195k in 10 years then you are saving almost £20k a year. So could you just get a very cheap 2 year fix and aim to pay it off over that period?

That won't work:


A 2 year fix will have limits on overpayment unless you target to repay the lot in 2 years with a 2 year term which a lender wont do.


OP should look for products with no product fee, as these are expensive on such a modest mortgage.

bigchris33

Thanks everyone for your replies.

We've decided that a 5 year mortgage suits us best so that we can keep repayments low. The property needs a fair amount doing to it, so our disposable income each month will be spent on home improvements. A lower monthly payment will also mean we can renovate taking a 'one thing at a time' approach over a couple of years.

A low/no product fee looks a very good shout - thanks Amnblog.
Yet to decide on the best product for us, so I'm doing some research tonight.

fraser

Get yourself to the fsa mortgage comparison tables

pjread

With your desire for flexibility and ability to save, an offset might be worth considering