A bit worried about rate rises.

Alarae

If you are worried, I would go with a longer fixed term.

We purchased our current house almost three years ago, and in that time our house has gone up by 65k. That's an increase of 25%. Now, we are upsizing and have the ability to do so because of the capital growth in our property. If we had waited, we would only just about be able to afford this house at the current value, but with a much higher mortgage.

Obviously it could always go the other way, but I don't see that happening soon with the shortage of housing at present.

Thrugelmir

Alarae wrote: »

Now, we are upsizing and have the ability to do so because of the capital growth in our property.

Likewise with the property you are buying. Treasury officials will be rubbing with the amount of additional debt you'll be taking on to pay the stamp duty liability.

amnblog

Amanda, if you are waiting to exchange contracts on your purchase, I hope your mortgage broker has recommended a product in light of your concerns about rises in interest rate? If not, speak to them immediately.

getmore4less

owen_money wrote: »

Ah 15% interest rates of the early 90's, you kids dont know how easy you got it these days (except for the fact you need to save thousands for a deposit -in the 90's they almost paid you to get your own house )

Seriously, I'm also worried, if it goes up .25 percent my mortgage will go up £23 per month

Remember those days well,
Three pay rises a year and a debt that got inflated away.

Don't think the kids today will get it that easy in their life time.

Peter999_2

getmore4less wrote: »

Remember those days well,
Three pay rises a year and a debt that got inflated away.

Don't think the kids today will get it that easy in their life time.

I don't know where you were living in the 90s but it certainly didn't seem that easy to me. I earned just over £8,000 a year and only ever got a measly pay rise once a year.

I could borrow a mortgage for 4 x my salary so had to buy the smallest, cheapest apartment (gallery bedroom). The deposit was 5% so a quarter of my yearly wage - I was very lucky that my parents had saved money throughout my life and gave me £2,000 (didn't tell me though - and would only allow it to pay for a deposit on a property). Then it was a 15% interest rate so about £412 a month which was a massive chunk of my wages.

It was by far the hardest period of my life and to cap it all my endowment policy is about £10,000 less than required (however I couldn't claim mis-selling as I actually read up on endowment policies and always knew that it was only ever a guaranteed death benefit and not guaranteed to pay off the mortgage at the end of the term).

Rose tinted glasses and all that.

Lauralou79

We were tested up to 11/12% rates with Natwest last year when applying for our mortgage! Luckily we are under 50% LTV so it's not a problem. Although rate increases do cross my mind so we fixed for 5 years and I'm overpaying a little while saving rates aren't great.
If you are worried then fix for longer on a lower rate while you can

Nick_C

If you are taking on a mortgage now, you should have budgetted for rate rises.

Your initial mortgage should easily be affordable. Put as much money as you can into any regular savings accounts that have interest rates higher than your mortgage rate, and when they mature make capital payments.