10 Year Fix - Thoughts

10yearfix

Hello,

My scenario - Mortgage Balance 55K. Term 12years. House value 170K.
Current mortgage with C&G fixed at 2% above base, so 2.5%. - I'm not in a mortage deal with them its just I've had the mortgage for so long its before they changed thier rules. So it can never go more than 2% above base.

I've seen a deal with First Direct. 10 year fix @ 3.09%. I can overpay, which I always have done, its portable and £950.00 in fees. Exit fee is £149.00 plus 2% years 2 - 10. So just over a grand.

I'm thinking that in 10 years or less I can get the mortgage paid off. I currently have no plans to move but if I did it would only cost me a grand to move to another lender if I needed to do so.

Its not so much a question I have. I wanted to share my circumstances and wondered if anybody is in a similar situation and wonder if there is a bad side to this deal. If I had to nail my colours to the mast I would say rates will go up in the next few years.

Many thanks for taking the time to read.

audigex

Rates will likely go up in the next few years, but not dramatically - and a 0.6% lower rate right now is a LOT more beneficial to you than a lower-than-bank-rate rate in a few years time when you owe half as much.

You're not just betting that rates will go up, you're betting that you'll pay less over the whole mortgage. Including the £2k in fees. Essentially, then, you're betting that rates will rise enough that you'll save over £2k in interest, plus whatever extra you pay in the next couple of years before the rate overtakes where you would have been anyway.

That said, with your situation... you're looking to have the mortgage paid off in 10 years anyway (or at least be negligible), and in such a position I'd rather lock myself into guaranteed monthly payment until the end of the mortgage.

You might gain or lose out by a couple of thousand over 10 years.... we don't know. But we do know that you'll be able to pay off your mortgage without any nasty surprises, and I think that stability is probably worth it. Even if you did lose out quite dramatically, it's still only going to be £10-30 a month.

jb66

Id stick with what you have. Your mortgage is so little that it is not making a huge difference if interest rates rise by 1%, its just not worth paying fees. Realistically interest rates will rise one day, but the day it rises more than 1% your debt will probably be less than 40k and when you get to that stage its a 20-30 quid a month.

10yearfix

Thanks folks for your opinions.

I like the idea that my mortgage will be either paid or neglidable in 10 years. (I'm 40 now) (I realise a lot can go wrong in that time ,but thats the plan). So the fact I know what I'm paying regardless of rates has its appeal.

11/12 years ago when I took the mortgage out I did gamble and did not fix, this has menat that in my own mind I've been lucky and have saved a lot of money when rates went down. The added lock in of the 2% has also been an advantage.

I've seen a lot of opinions and forecasts but I can easily see rates back to 5% within a very short time. I'm probably wrong of course but the BOE forecasts have been shocking since the crash. If I'm right then the quicker I pay off the mortgage and use the 400 quid to add to my savings, the better.

This is just an opinion not a statment of fact. I'm a potter with no finanicial training, I can't spell either.

springbokfamily

Hi
I'm in a very similar situation to you.

Hello,

My scenario - Mortgage Balance 86k. Term left 16years. House value 315K.
Current mortgage with Nationwide at 2% above base, so 2.5%. Same-had mortgage for since before rules were changed, so always 2% above base.

I looked at FirstDirect 10yr fixed, and Nationwide. The FD one has fees (which I couldn't afford up front), but the Nationwide as a longer/larger early repayment charge.
I missed out on getting both of these when the rate was even lower than it is now as I kept worrying, am I doing the right thing.
I regularly overpay and can easily pay it off in the 10 years.
I think the thing that was holding me back is be my constant thought "is this really a good deal".
I've done lots of calculations, and I can't see any reason why it wouldn't be though.

I did actually speak to Martin Lewis about this at the Ideal Home Show, and he agreed I was doing the right thing fixing for the 10yrs. Just didn't get around to doing it yet, as I broke my foot and life just took over!

Anyway, sat down yesterday to do my application through Nationwide and the rate has increased again slightly (but only makes the payment slightly higher monthly than it would have been, and it's still less than I'm paying now!)
So I've looked around again and TSB also do a 10yr with a £265 fee (more affordable) and no early repayment fees after the first 5 years!

Too much to think about!

audigex

10 year with a £265 fee and no early repayment is almost win-win if the rate is reasonable, as you can opt back out again in 5 years if you can find a better 5 year rate... What's the rate on that TSB 10 year fix with no fees after 5?

springbokfamily

TSB 3.19%
FD 3.09%
Nationwide 3.14%
A matter of a few £ between them in terms of the monthly payment, but I overpay anyway approx £150-£200 pm