Should I fix for 2 years or 5 years?

HotPantsCruiser

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

That puts you way ahead of most of the population though, in a scenario like that the price of your property would collapse and you would be left with a large high interest rate debt?

RelievedSheff

HotPantsCruiser said:

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

That puts you way ahead of most of the population though, in a scenario like that the price of your property would collapse and you would be left with a large high interest rate debt?

And you would be still paying someone else's mortgage so your rent would go up as well.

lookstraightahead

I would have gone for 5 years (did earlier this year in fact) - but then I've been stung in the past by phenomenal interest rates. I'm not looking to move any time soon either.

HotPantsCruiser

RelievedSheff said:

HotPantsCruiser said:

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

That puts you way ahead of most of the population though, in a scenario like that the price of your property would collapse and you would be left with a large high interest rate debt?

And you would be still paying someone else's mortgage so your rent would go up as well.

Sure, but wages would likely be rising and you can choose to look for somewhere cheaper, you can`t choose to walk away from a high interest rate debt secured on a falling in value asset.

Thrugelmir

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

Why are you struggling on affordability grounds then? 

Borrowing £200k over 30 years @ 15% = around £2,500 a month repayments. 

lookstraightahead

Thrugelmir said:

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

Why are you struggling on affordability grounds then? 

Borrowing £200k over 30 years @ 15% = around £2,500 a month repayments. 

Ouch! 😳 that would be a shock to many 

lookstraightahead

theartfullodger said:

We can tell you in 5 years time which was wiser.  ANY other answer is just guesswork.

In November 1979 under Thatcher my (for then) large mortgage increased in cost as BoE interest rates hit 17%.  My building society was kind as they only required 15% until rates dropped later.

Painful: It happens. 

Yes I remember it well.

RelievedSheff

HotPantsCruiser said:

RelievedSheff said:

HotPantsCruiser said:

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

That puts you way ahead of most of the population though, in a scenario like that the price of your property would collapse and you would be left with a large high interest rate debt?

And you would be still paying someone else's mortgage so your rent would go up as well.

Sure, but wages would likely be rising and you can choose to look for somewhere cheaper, you can`t choose to walk away from a high interest rate debt secured on a falling in value asset.

The vast majority of home owners wouldn't be affected by a drop in house prices.

gary83

efirox said:

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

Except you’ll also now be responsible for maintaining the house. It’s not just about the big jobs like a new boiler or a leaking roof, the little stuff can soon add up to.

HotPantsCruiser

RelievedSheff said:

HotPantsCruiser said:

RelievedSheff said:

HotPantsCruiser said:

efirox said:

HotPantsCruiser said:

efirox said:

Thanks all, we decided to with the 2 year option in the end as the rate is ending tonight.

The way the market is, it's about what we can buy, not what we want to buy unfortunately  

The payments will be what we're paying for rent so our lives won't really change, which is the good thing!

What happens if the payments rise after two years?

We're fine, unless the rate goes to 15% or higher, in which case it would get tough

That puts you way ahead of most of the population though, in a scenario like that the price of your property would collapse and you would be left with a large high interest rate debt?

And you would be still paying someone else's mortgage so your rent would go up as well.

Sure, but wages would likely be rising and you can choose to look for somewhere cheaper, you can`t choose to walk away from a high interest rate debt secured on a falling in value asset.

The vast majority of home owners wouldn't be affected by a drop in house prices.

No, not unless they wanted to sell and had a particular price in mind, lots of people with mortgage debt would be affected for all sorts of reasons though.