1st time buyer 10 year deal V's 3 year deal

mustachio

Hi all,

Going to apply for first time mortgage in next couple of days. As is known rates are exceptionally good right now.

I am considering potentially a 10 year deal with TSB 4.7% overall APR

Or 3 year deal with Halifax 4.3% overall APR


What are the drawbacks of the 10 year deal? If this is exceptional rates and I plan to live long term in this place-are there any draw backs? Is this likely to save me £1000's or am I wrong?

PBA

The draw back of a 10 year deal is that you're tied in to it for 10 years. If your plans change you could find yourself with a large penalty for settling the mortgage early.

By the way, APR isn't really a good way of comparing mortgages. The APR considers the initial fixed rate and also the lender's standard variable rate after the initial fix ends. However you won't be tied in at that point, and anyway the SVR may well have changed, so it's only the initial fixed rate (and fees) that are relevant.

Contemptuous

PBA wrote: »

The draw back of a 10 year deal is that you're tied in to it for 10 years. If your plans change you could find yourself with a large penalty for settling the mortgage early.

Not true of the TSB 10 year deal - you're only tied in for five years, after which there are no penalties for moving to another lender etc. if your circumstances change.

jayson043

What's your mortgage loan to value ratio. With 5 years of mortgage payment would you benefit from a lower mortgage rate, assuming of course interest rates don't change.

mustachio

jayson043 wrote: »

What's your mortgage loan to value ratio. With 5 years of mortgage payment would you benefit from a lower mortgage rate, assuming of course interest rates don't change.

At best 10% deposit my friend.

amnblog

A first time buyer signing up to the redemption charges below would be making a big mistake in my view.


Do yourself a favour and get some advice from an experienced mortgage broker.


Before 01/05/2016 5%
01/05/2016 - 30/04/2017 4%
01/05/2017 - 30/04/2018 3%
01/05/2018 - 30/04/2019 3%
01/05/2019 - 30/04/2020 1%

dekoder

With LTV of 90% it would probably work better financially if you take a shorter fix and when it finish hopefully the LTV improves (overpayments, HPI, repayments) giving you access to better rates.