5 or 2 year fixed rate?

Thrugelmir

yllop1101 said:

lookstraightahead said:

T1T2T3T4 said:

london21 said:

T1T2T3T4 said:

london21 said:

I opted for 2 years fixed because if change in my circumstances and would hate to pay ERC also hoping for a better LTV due to home improvements I am doing. But if you do not need to release equity and want certainty 5 years might be better. 

Are you planning big house improvements? We want to start updating things too but don't know how much we would get done in two years

Wasn't massive but my property purchase was via auction and cuurently nearly maxed out my borrowing threshold based on my income.
I am hoping the property would be valued higher in 2 years (area is due croassrail in 2022) and can get a better LTV and rates.
I might want to release equity.

I did the kitchen and bathroom
moved the boiler from the box bedroom to the kitchen 
new carpets for the stairs and landing and other bits got done.

After the 2 years likely do 5 years going forward.

You've done lots! It will definitely be worth more with all that 

Internal work doesn't usually increase the value of a property.

Hmm I just managed to appeal a desktop valuation on my remortgage- Nationwide estimated at 319k and I got 335k approved by listing all the work (some external like roof refelted and new gutters/soffits, but then internal too like french doors fitted, replastered walls, wooden shutters, bathroom refurb) plus linking to some nearby sold houses for similar. 

That was the reason that the generic desktop valuation was uprated. 

gozaimasu

yllop1101 said:

Hmm I just managed to appeal a desktop valuation on my remortgage- Nationwide estimated at 319k and I got 335k approved by listing all the work...

@yllop1101 What's the process for doing that? I chose to re-mortgage with my current lender but they undervalued (based on higher prices for identical recently sold houses in the area) and if I wanted to challenge this I would have had to pay a £500 valuation fee. Whether or not they would have physically visited the property for this valuation, I don't know.

gozaimasu

Thrugelmir said:

That was the reason that the generic desktop valuation was uprated. 

How ridiculous. The generic desktop valuation should have taken recently sold prices into account.

Sistergold

MobileSaver said:

Sistergold said:

I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on.

The other side of the coin is that with so many variables not in your control it can make sense to have some stability and control over one of the most essential parts of your life, i.e. the roof over your head.

It's also a simple fact that the vast majority of people stay in their home for well over five years so you'd have to be a particularly "glass half empty" type of person to be planning your future on the basis that you may want to move again in just one year!

You are right “glass half empty approach”! 

I do see the sense in fixing for 2 years, I just tend to find 5 years fix that much two long. I can kind of see where I will be in 2 years and if circumstances should change it’s not too long to wait but 5 years I do find it a tad too long. As for risk of 15% rates the only way round that for me that will make sense is a lifetime fix as I find if rates are going to rise it’s likely to be gradual and at 2 or 5 year fix a 15% rate will catch us all. I do get that most people want predictable bills I always choose a 2yr discounted tracker deal and I always get the odd letter of it’s going up or it’s going down I like paying whatever is going at that time. Most of the time with the discounted tracker that rate is lower than the fixed and because of the discount it’s still okay when rates go up, then I just change it to whatever is a good deal in 2yrs I feel it gives me a chance to take the best at that time. 

Don’t get me wrong there is a lot of sense in fixing and for most of us we stay in the same house for donkey years! 

Thrugelmir

gozaimasu said:

Thrugelmir said:

That was the reason that the generic desktop valuation was uprated. 

How ridiculous. The generic desktop valuation should have taken recently sold prices into account.

Land Registry is always running behind. More so since the pandemic unsurprisingly. Nationwide only there have own data available initially. 

getmore4less

Sistergold said:

MobileSaver said:

Sistergold said:

I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on.

The other side of the coin is that with so many variables not in your control it can make sense to have some stability and control over one of the most essential parts of your life, i.e. the roof over your head.

It's also a simple fact that the vast majority of people stay in their home for well over five years so you'd have to be a particularly "glass half empty" type of person to be planning your future on the basis that you may want to move again in just one year!

You are right “glass half empty approach”! 

I do see the sense in fixing for 2 years, I just tend to find 5 years fix that much two long. I can kind of see where I will be in 2 years and if circumstances should change it’s not too long to wait but 5 years I do find it a tad too long. As for risk of 15% rates the only way round that for me that will make sense is a lifetime fix as I find if rates are going to rise it’s likely to be gradual and at 2 or 5 year fix a 15% rate will catch us all. I do get that most people want predictable bills I always choose a 2yr discounted tracker deal and I always get the odd letter of it’s going up or it’s going down I like paying whatever is going at that time. Most of the time with the discounted tracker that rate is lower than the fixed and because of the discount it’s still okay when rates go up, then I just change it to whatever is a good deal in 2yrs I feel it gives me a chance to take the best at that time. 

Don’t get me wrong there is a lot of sense in fixing and for most of us we stay in the same house for donkey years! 

Since fixes became more popular there have been very few windows where change fixing saved money over the term of the fix.

There were a lot of very good lifetime trackers/follow on rates  for a while that were the best option by a long way over fixes.

We might be entering one of those now if the trend is up for a while but even then for many 5 years is short term in the big picture and those at end of life <10y to go they tend to have lower borrowing the impact of rates is a lot lower

lookstraightahead

gozaimasu said:

Thrugelmir said:

That was the reason that the generic desktop valuation was uprated. 

How ridiculous. The generic desktop valuation should have taken recently sold prices into account.

Problem is that recent sales aren't a very good indication at the moment.

Crashy_Time

https://www.theguardian.com/money/2021/oct/29/homebuyers-cheap-mortgages-interest-rate-changes-rises

getmore4less

Crashy_Time said:

https://www.theguardian.com/money/2021/oct/29/homebuyers-cheap-mortgages-interest-rate-changes-rises

According to financial firm AJ Bell, if the predictions are correct, someone who borrowed £250,000 on a two-year fixed-rate mortgage at 2.06% earlier this year could see their annual payments jump by £600 when they go to remortgage in 2023. Someone with £450,000 of borrowing, on the same terms, would see their costs rise by £1,068 a year.

Tiny rise in cost for that level of borrowing

that £250k over 30y is close to £950pm and that extra £600 puts it up £1000

Good chance some could be offset by a better LTV.

Read another article talking about a price crash, that was qualified by maybe in the next decade.

Crashy_Time

getmore4less said:

Crashy_Time said:

https://www.theguardian.com/money/2021/oct/29/homebuyers-cheap-mortgages-interest-rate-changes-rises

According to financial firm AJ Bell, if the predictions are correct, someone who borrowed £250,000 on a two-year fixed-rate mortgage at 2.06% earlier this year could see their annual payments jump by £600 when they go to remortgage in 2023. Someone with £450,000 of borrowing, on the same terms, would see their costs rise by £1,068 a year.

Tiny rise in cost for that level of borrowing

that £250k over 30y is close to £950pm and that extra £600 puts it up £1000

Good chance some could be offset by a better LTV.

Read another article talking about a price crash, that was qualified by maybe in the next decade.

So you think rates could remain this low for 30 years? Interesting. The headline is from The Express which used to have headlines like "House Prices Going to The Moon" etc. LOL, sentiment really is everything in markets..........