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Mortgage fixing help?
Quixoticity11
Posts: 14 Forumite
Hi, I’m buying my first house. I’m getting a 90% mortgage, and I’m trying to decide whether I should fix it for 2 or 5 years.
On the one hand, the thought of interest rises terrifies me because my mortgage is v.big and I won’t be able to afford to keep paying it if rates rise by much. So, maybe fixing for 5 years is wise to give me time to get onto a higher salary (not that I will ever be a high earner, am public sector pay scale, I’ll max out at 50k) and for house value to increase.
On the other hand, in the short term, fixing for 2 years will give me lower monthly repayments (£80-100 less per month) so give me spare cash to do the house up and have a better quality of life generally (which I really want, esp after coronavirus and being stuck in a flat).
I really want to go for the 2 year fix and have extra in my pocket each month, but the worry about interest rates holds me back. The internet tells me that interest rates might go up in 2022?
What do you think would be wise in my situation? (I am speaking to a mortgage broker on Monday by the way but I just wondered what others think?)
On the one hand, the thought of interest rises terrifies me because my mortgage is v.big and I won’t be able to afford to keep paying it if rates rise by much. So, maybe fixing for 5 years is wise to give me time to get onto a higher salary (not that I will ever be a high earner, am public sector pay scale, I’ll max out at 50k) and for house value to increase.
On the other hand, in the short term, fixing for 2 years will give me lower monthly repayments (£80-100 less per month) so give me spare cash to do the house up and have a better quality of life generally (which I really want, esp after coronavirus and being stuck in a flat).
I really want to go for the 2 year fix and have extra in my pocket each month, but the worry about interest rates holds me back. The internet tells me that interest rates might go up in 2022?
What do you think would be wise in my situation? (I am speaking to a mortgage broker on Monday by the way but I just wondered what others think?)
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Comments
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I'll pre-empt what others will say no doubt. If you are that close in terms of affordability then your mortgage is too much. Interest rates are at all time lows.
However, if you want a simpler answer - as long as possible if you can't afford rises and are going to move.
Are you sure you'll get the mortgage if it's that tight?3 -
2 years and overpay to get the LTV better for a better rate
Don't go spending it.2 -
How do they overpay significantly when so close to limit on affordability?getmore4less said:2 years and overpay to get the LTV better for a better rate
Don't go spending it.
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Thanks for the reply. I think I can afford it as things stand (with the 5 year fix the monthly payment would be 30% of my net income. That’s okay I think, but the tope end of what is advised?) I don’t have lots of outgoings or any other debts, but I confess I would love to save for a holiday or a new car...0
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"The internet" is guessing.Quixoticity11 said:
The internet tells me that interest rates might go up in 2022?
The Bank of England's Monetary Policy Committee set bank base rates, making the decision every six weeks or so.
https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2021/june-2021
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