5 or 10 year fix?

wanless

Thanks everyone I think we're going for the 10 year fix, if I've read it right we can make unlimited lump sum overpayments without charges as long as there is some ballance for the 10 years (it's the 10 year fix with first direct)

Feels wrong giving up the low rate tracker but it wouldn't take much of a move in interest rates to make it not worth keeping

getmore4less

wanless wrote: »

Thanks everyone I think we're going for the 10 year fix, if I've read it right we can make unlimited lump sum overpayments without charges as long as there is some ballance for the 10 years (it's the 10 year fix with first direct)

Feels wrong giving up the low rate tracker but it wouldn't take much of a move in interest rates to make it not worth keeping

It would need a bigger moves than you might think

You are £1k down with the fees to start with and by overpaying to the same level as the fix you build up further protection from the rate rises.

getmore4less

martinsurrey wrote: »

£65k on (1.29 + base) + £50k on (3.49 + base) = average rate of
base + 2.25% and with base at 0.5% the OP current borrowings are at 2.75%

with base rate only going to go one way in the next 10 years, the fix looks good at 2.89%

fixing in will lose you flexability to over pay and save interest.

BUT with savings rates available at 2-3% now (5 year bonds) and once rates start rising, I expect savings rates to follow, the marginal loss of not overpaying is minimal , and could be negative in a few years at a borrowing rate of 2.89% (what I mean is you could take out 5 year bonds with what you would have overpaid, and earn the same interest as your mortgage is costing).

You don't compare against the current rate on the second part but the best alternative to the fix on all of it.

pavlovs_dog

wanless did you go for this in the end? We are actively considering this mortgage.

We have £107k of mortgage debt, and would be looking at a mortgage over 25 years. We would be able to afford circa £300 a month OPs whilst I am in FT work, and would ensure the mortgage debt is still affordable when we decide to start a family. It would allow us to make a significant dent in our mortgage debt, and would be a big step towards being mortgage free by my early 40s.