10 Year fixed a wise move?

DaveShack

Hi all,

Just after some advice really. We are currently on nationwides BMR 2.5%, all this talk of interest rate rises has got me thinking about fixing.

We currently have a £152,000 left to pay with 24 years left on the term. We also overpay by £300 a month and approximately £5000 lump sum every 2-3 years.

In my position would you move onto a 2.94% fixed deal? I like the stability it offers and I don't want to go back to paying 6% like we did for the first few years. I don't think we will be in a position to overpay by £15,000 a year so the ERC probably wouldn't be an issue.

Has anyone fixed for that long in the past? Any regrets?

Any help is much appreciated

Jon_B_2

Only you really know the answer. If you are in a forever home and don't envisage moving, then crack on.

ViolaLass

It sounds potentially like a very wise move.

Whether it's the right move for you is another matter.

getmore4less

Run some numbers and see how much it might cost you if/when rates change.

doing a single rate change(unlikely) at 1y,2y,5y

£152k over 24years with £300 OP is a £1kpm payment
1. 2.5% tracker
2. 2.94% fixed 10y £1k fee.

(that fixed rate come with a 1k fee you have to add on)

1st year what's left, the longer the tracker stays below the fix the higher the rate of the tracker can go to break even
1. £143706
2. £145396

To break even in 9 more years fix will be £65913 tracker can go to 3.137%

what if the rates can only go up mob are still premature and it is 2 more years.

2nd year what's left,
1. £135201
2. £137566

To break even in 8 more years fix will be £65913, tracker can go to 3.260%.

5y its 3.976%
...
your call on the rate rises.

Throw in £15-£20k more overpayments and you are under £50k in 10 years with the fix a £1kpm payment over 14 years will take a rate of over 23% if rates go that high a lot are in deep dodo.

worst case rates go no where for 10 years(before the big OP)
1. £58950
2. £65913

A £7k or less call on rates.

PixelPound

It depends on your motives. If its no-risk knowing what your interest will be for the next 10 years, then as I assume you are not planning to move, then fix. However some people are more concerned with paying the minimum amount of interest, so shorter fix or tracker would be the option.

For you, I think its the fix, as you want to have peace of mind that you won't have to suffer 6%** and can budget your overpayments in.

** I doubt it will reach 6% in the next 10 years (though no guarantees), in fact doubt it will reach 3%. I know BoE have said impending rate rise, but they said that before yet we've had 8 years of 0.5%. Are we even likely to have a rise in the next 2 years? Doesn't look likely, though if it was it would be just one 0.25% It wouldn't surprise me to see a headline in ten years time "Is he the one: BoE Governor says we will be rising the rate to 1% sometime in the next year, as rates remain same since 2017"

DaveShack

Hi All,

Thanks for the replies. I guess I was asking an impossible question. I think I was just looking for reassurance as 10 years is a long time to commit to anything.

We are in our family home and we wont be moving for at least 20 years (when we might downsize, but unlikely.) The piece of mind of paying the same every month is high on my list of priorities, especially when 0.5% interest rate rise would see me paying more than the fixed rate percentage wise.

Thanks for doing some number crunching for me, a potential saving of 7K compared with the security of knowing exactly what I will be paying for 10 years. If my mortgage was smaller I think I would be inclined to take more chances but for now consistency is more appealing.

Again thanks for the replies, its interesting to see things from other peoples point of view.

Annie78

Hi,

I'm thinking the same as you at the moment. We're with Nationwide on the BMR and wonder if now is the time to fix. We only have £25K left on the mortgage and 8.5 years. We're making overpayments of £100 every month. I'm tempted to reduce the term to 6 years and take a 5 year fixed rate of 2.34%. This would increase our payments to what we are paying every month right now with the over payments so not worried about making the payments but my concern is that this is not our forever house. I'd love to move but can't afford to move to the area we want right now so guessing we will be here for the next 5 years but things might get to the point where I need to move for my own sanity.

It's good to hear others point of views.

pollyanna24

I am also on this mortgage and because I got the mortgage before 2009 (I think that's the date), I'm planning on keeping the mortgage as once you go off Nationwide 2.5% deal, they say you can't go back on it.

Also, with this mortgage, if you have it before a certain date, any repayments you make can be claimed back with no questions asked if ever you desperately need the money. If you change to a new deal, this option disappears.

Of course, I never want to borrow back the money I have overpaid, but I plan to keep this mortgage so that I can if ever the need arises.

Annie78

pollyanna24 wrote: »

I am also on this mortgage and because I got the mortgage before 2009 (I think that's the date), I'm planning on keeping the mortgage as once you go off Nationwide 2.5% deal, they say you can't go back on it.

Also, with this mortgage, if you have it before a certain date, any repayments you make can be claimed back with no questions asked if ever you desperately need the money. If you change to a new deal, this option disappears.

Of course, I never want to borrow back the money I have overpaid, but I plan to keep this mortgage so that I can if ever the need arises.

Hi, That is one of the reasons I am wanting to hold off fixing. I think we've decided to just stay as we are at the moment and give it a bit more thought. If we knew we were going to stay here longer then we'd prob jump at the fixed rate but our mortgage is very small and we really wouldn't notice much of a difference if the rate increases (small increase)

darkcloudi

Just like yourselves i'm on the BMR to.

I was reserving and cancelling my mortgage offer with Nationwide a number of times but feel now is the time to fix on the 2.34% for 5 years (only fixing for the re-assurance of knowing what I will be paying, guess everyones circumstances are different).

Would want to stay on the 2.5% due to the ability to borrow back what I have overpaid but feel since the rate is lower then the BMR I am going to fix. It allows me the 10% overpayment which I am going to take advantage of and pay the mortgage off as soon as I can.

Thrugelmir

In all likelihood a rate of 2% above BOE base will be highly competitive for some considerable time. Unlikely that mortgage interest rates going forward will be priced so keenly as in the past. Only central bank and treasury intervention has enabled rates to remain so low recently. With funding provided at cheap borrowing rates to the lenders.