10 year fixed - any reason not to?

chrisw99

getmore4less wrote: »

Put some real number up like the size of the mortgage, payments, max you could pay and someone can run some numbers.

Mortgage currently at £70016.07 (was hoping this month would begin with a 6, always nice to break each 10k barrier)
Last month April 2027
Currently at 2.5%, payments £562.99


Can't remember exactly the terms of the 10 year deal, I only went in out of interest and didn't take a screenshot, but it was around 2.7% and was just a few quid more than I pay now.




As I see it, with the base being 0.5% and not likely to ever go lower than that, this is about as cheap as I'm going to get it.
To the people who suggest a 5 year deal, what if the interest rates shoot up massively in 4 years time? I'd be coming out of the deal onto a standard rate much higher, and the subsequent fixed deals are probably nowhere near 2.7%

somethingcorporate

chrisw99 wrote: »

To the people who suggest a 5 year deal, what if the interest rates shoot up massively in 4 years time? I'd be coming out of the deal onto a standard rate much higher, and the subsequent fixed deals are probably nowhere near 2.7%

This is the logic I was using to justify it to myself.

If you can barter yourself down to 5 years, why not 2 etc?

If you like the security of a low fixed rate then go for it (I would if I were lucky enough to be in your shoes).

LadyGnome

It really does depend on your personal circumstances. If your income is likely to change in a positive way or you will come into a lump sum then a shorter fix may be better. If, on the other hand, certainty is what you need and you are happy to accept any limitations on overpayments then it is a good option.

Whilst nobody can predict what interest rates will do (although there are people on trading floors spending their lives trying to do that!!) I am cynical enough to believe that NW wouldn't be offering a 10 year fix if they thought interest rates were likely to shoot up in the short to medium term.

claire111

a) Is it portable ?

b) Is it really portable?

Portable isn't always what it appears to be. Sometimes it's an invitation to remortgage at the same fixed rate but only if you meet their new up to date recently revised lending criteria, which might require you to have 3 legs.

Read the small print and read it again.....

getmore4less

LadyGnome wrote: »

It really does depend on your personal circumstances. If your income is likely to change in a positive way or you will come into a lump sum then a shorter fix may be better. If, on the other hand, certainty is what you need and you are happy to accept any limitations on overpayments then it is a good option.

Whilst nobody can predict what interest rates will do (although there are people on trading floors spending their lives trying to do that!!) I am cynical enough to believe that NW wouldn't be offering a 10 year fix if they thought interest rates were likely to shoot up in the short to medium term.

Come into some money you can always save/invest elsewhere rather than reduce a debt with a very low interest rate.

Pay the mortgage of with that money and you are then saving investing anyway.

People make all the noise about justifying fixes in the first place over a tracker(which often are a far better choice) then go fix for 2 or 5 years which is just a temporary situation.

Unless there is a trigger point that will need someone to make a change a good option, moving, lower LTV so access to better deals are the 2 main ones.


Once you start seeing long term fixes around the rates of good trackers and close to full term then that's the ime to fix.

Base + 2% and below has been the benchmark tracker rate for some time anyone on that it has been rare for any fix to be worth considering due to the high follow on rate.

This 10y fix is close enough to be worth a look, rather than shorter fixes the better comparisons are the lower cost trackers that are out there.

I am in agreement that rates are going nowhere for some time and that is what the market rates seem to support, which might make a short term deal like a very low 2 year fix with a follow up deal to go longer term if it looks like the market will be changing but then it might be too late.

For those close enough to a 10year term now may be the time to lock in.
It may not be optimum but it will not cost that much more than the 2.5%

getmore4less

chrisw99 wrote: »

Mortgage currently at £70016.07 (was hoping this month would begin with a 6, always nice to break each 10k barrier)
Last month April 2027
Currently at 2.5%, payments £562.99

(all calculators come out with slightly different numbers to lenders)

£70016.07 @ 2.5% £563pm 12y(144m + £50) interest £11107

a look at nationwide offers not seeing a 2.7% and many offers have fees.

for a 2.7% deal same payment new term is 147m+£30 interest £12212
so 3 months longer at an extra cost of £1100

or same term new payment £569.78 interest £12032 £900 more.

or up the payment to pay of in 10 years £666.43.

The comparisons should be against the best base rate tracker on offer some are below 2% eg Coventry 1.89% with £300 fees

£70316.07 @ 1.89 paying £563pm 139m+£103 interest £8044 potential cost is over £3k.

A low tracker rate with overpayments for a couple of year give protection against future rises worth a model to show how effective this can be.

eg using the Coventry for 2 years @ 1.89% against the 10y 2.7 fix with a 10 y term

1. £70016.07 @ 2.70% paying £667pm in 2 years £57467
2. £70316.07 @ 1.89% paying £667pm in 2 years £56721

to then pay off in another 8 years the rate on the tracker can go up to 3.04% a base rise of 1.15% ( the fix just works no risk with a £667 payment),
if rate stayed low for
1y 2.79%
3y 3.40%
4y 3.97%

chrisw99

Thanks for those calculations. I should probably point out that I am not in a position to pay overpayments, I have quite a bit of debt on credit cards and other loans so any extra cash is going to pay those off which could take some time.


Hence my temptation to fix the mortgage at a monthly fee I can manage without any nasty surprises along the way.

getmore4less

chrisw99 wrote: »

Thanks for those calculations. I should probably point out that I am not in a position to pay overpayments, I have quite a bit of debt on credit cards and other loans so any extra cash is going to pay those off which could take some time.


Hence my temptation to fix the mortgage at a monthly fee I can manage without any nasty surprises along the way.

That other debt may impact the choice of lender so the rock bottom trackers may not be available.

if the other debts are higher interest then getting the mortgage payment down as low as possible to free up cash for the other debt might be financially beneficial even if mortgage rates go up.

The fix and forget is also very attractive as you can focus on the other debts.

chrisw99

I've just gone back through the switching process on the Nationwide website. I rounded down a bit in the original email.
The actual 10 year products being offered are


10 years fixed at 2.79% - fee of £999 , monthly payment £569.42
10 years fixed at 2.89% - fee of £0, monthly payment £572.69


So it was the one with the fee which was just a few quid more. If I had to choose I'd go for the £0 fee as it's only under £10 more than I pay now.


Early repayment charges are
In first 4 years, 7% of amount repaid
5th year, 6%
6th year, 5%
7th year, 4%
..
10th year 1%


Early repayment applies if you exceed your overpayment allowance, transfer to another product or repay all or part of your loan.


Overpayments (either an annual percentage of the initial loan amount or a stated monthly amount) can be made.


Portability . You can take this product with you if you move home during your initial deal (or benefit) period.

getmore4less

Those higher rates make a low cost tracker/overpay much more attractive for those than can get one.