How long to lock in rate right now?

KECbythesea

Are FTB mortgage rates on an 85% of about 2.4% about right? And should I lock in for two, three or five years? 

I’ll have a change of circs in two years (negative) and again in 7 (postive).

getmore4less

If you know your finances will go down then predicting affordability for that gap between 2y-7y will be important, longer full term gives a bit of flexibility to overpay for 2 years but have a potential lower payment for the in between ones.  


Pick the right lender with a history of decent retention deals then your benchmark when you need to change will be the retentions on offer.

Particularly important if you know your finances will change so a new lender may not be on the cards at change time.


There is no right answer because your LTV will change as will the rates both could go either way, 

Rates have been slowly creeping down at higher LTV


LTV will improve through paying down the debt and could go up/down from that depending on property values.





There was a thread on HUKD(got deleted) where  people were saying  Santander retentions have been  good.
Santander  don't publish them so maybe a broker knows what they have been offering compared to the new business rates

KECbythesea

Thanks for that.
It’s Halifax as they are only one of a few who will lend while I’m changing jobs. And they were happy to go to my amount.
I have gone for the three years thinking if I can bank some savings while in good financial health for two years, I can see how I manage on less for the subsequent year before rearranging thereafter.
I believe I can also pay up to 10% each year extra to bring it down.
One more question: will I have to stay with Halifax beyond the three years, for the twenty two years of borrowing, or is it an open market again then?

MovingForwards

If you want to stay with Halifax for the full term, just pick another fixed rate. If you want to remortgage to another lender after your fix is up, you go through the whole process like when buying originally.

I wanted the stability of knowing what my payments are without the pressure of remortgaging after 2 years. I'm with an adverse lender, opted for a 5 year fix but will consider remortgaging after the 2nd year and pay the ERCs.

getmore4less

Why start at 25 years if you know you will have reduced income in the future?
Going long and over pay gives more options to reduce payments later.


If Halifax is your only option,  they no longer publish retention rates but used to and may still penalise smaller mortgages and were never that competitive when they did publish.

A broker may have more up to date information.

K_S

KECbythesea said:

Are FTB mortgage rates on an 85% of about 2.4% about right? And should I lock in for two, three or five years? 

I’ll have a change of circs in two years (negative) and again in 7 (postive).

@KECbythesea There isn't close to enough information to say whether the rate you've got is the best you can do. There are multiple mainstream lenders who will consider applicants who are changing or have just changed jobs, not just Halifax.

How long a fix you want is a function of your attitude to risk, whether you think rates might move up/down significantly in the next few years, whether you expect to move at all in the interim period, whether you may overpay in the interim, etc etc.

With my broker hat off, personally at 85% LTV I would fix for no more than 2 years with a mainstream lender, but that's mostly because I'm averse to long contracts and (in my opinion which might well turn out to be completely wrong), interest rates are presently a bit high for 85%+ LTV mortgages. As long you are with a mainstream lender, you should have competitive options to switch to if you are not able to remortgage in 2 years.

Otoh I have clients who like to fix and forget, and so prefer the certainity of a 5 year fix.