Mortgage Rates

Jaguar_Skills

Pretty new to all this.

Just had an offer accepted on a house.

We have been offered a five year fixed deal @ 2.94% based on us putting down a 25% deposit. We are a little limited in lenders due to my girlfriends employment (self employed director with only 1 years accounts)

Is a 5 year fixed term a good bet at this stage?

I appreciate we never can know. The other option is 2 year at 1.74%?

Is it a complete guess as to whether rates will rise above this amount?? Any thoughts anyone?

Landofwood

The head of the BoE recently indicated that interest rates are likely to increase next year.

This will certainly have an effect on those customers on SVRs and trackers, but fixed rates are likely to remain competitive - in my opinion.

Thrugelmir

Rather than trying to learn to crystal ball gaze. Make your decision based on what would impact you. Would fixing your outgoings for the next 5 years be of benefit for example?

Fixed rates are always speculation. As changes to rates often arise from yet unseen or unforecast events.

amnblog

Thrugelmir wrote: »

Rather than trying to learn to crystal ball gaze. Make your decision based on what would impact you. Would fixing your outgoings for the next 5 years be of benefit for example?

Fixed rates are always speculation. As changes to rates often arise from yet unseen or unforecast events.

Totally agree. It is not a 'Mystic Meg' decision.

Jaguar_Skills

Thrugelmir thanks for your comment. How do you mean would fixing it be of benefit? I suspect at some point in the next few years we will need to go down to one wage for a period!

PixelPound

If you fix you know for 5 years what your payments will be and that's factored in all your budget/financial considerations. Fix for 2, pay less but risk on what the rate will be after 2 years. If rates are what they are now or within a percent then going for 2 years will save you money over 5, but if they go up by a fair bit more your payments will be more.
So if you are going down to 1 wage, could you afford the rate on a 5 year fix? Would it be peace of mind whatever the rate you can afford to be on only 1 wage? Would you be flexible enough so if go 2 years would be able to cope if the gamble that rates didn't very much doesn't pay off?

dimbo61

Is this a family home or one bed flat ?
Will someone be at home with the kid/s for the next 4/5/6 years ?
Will you need or have to move home in the next 2/3/5 years due to work ?
Regular job or big pay rises over next few years ?

Jaguar_Skills

It is a family home - FTB but bought a 4 bed house. We are likely to stay here for 7 -10 years, it is close to schools etc.

I suspect that one of us will only stay at home during the first year or so then we are both likely to go back to work. No moves for work required.

Both of us are likely to see pay rises over the next few years.

amnblog

Jaguar_Skills wrote: »

Both of us are likely to see pay rises over the next few years.

You must be the family the Government has been telling us all about!

dimbo61

Well the BOE base rate has been 0.5% for a very long time But we are now in deflation ! So it might stay at 0.5% for a few more months.
You need long term security for your family, fancy trying to remortgage if the wife is off work long term and you have a large mortgage ?
5 years will also give you time to pay off some of the debt and increase the equity in the property.
You are normally allowed to overpay by 10% even when in a fixed deal But check the T&C,s of the mortgage offer.