5.2% fixed 5yrs, £795 arrangement. Good?

dweeby

Hi,

Just about to sign up for a 5 year fixed at 5.22% mortgage from the Cumberland Building Society, with a setup cost of £795. We're living in rented after selling our house, and are about to buy our next home.

We live in Cumbria, and see the local BS as a slight advantage (for some unknown reason!).

Good deal? we thin its ok (if not the very lowest interest rate).

jonesMUFCforever

How much are you borrowing and what is the 'normal' mortgage rate if you were not on a fixed?

From this you can work out whether it is a good deal or not
eg borrow £100k annual interest = £5220 + annual cost of fixed rate of £159 = £5379 ( I get £159 by dividing £795 by 5).

Normal mortgage rate say 6.75% so annual interest would be £6750

So in this instance you win by taking out the fixed rate - provided interest rates don't fall below your fixed rate.

The higher the amount you borrow the better saving you make but also conversely the lower amount you borrow the less you save.

Hope this makes sense - today's been a long day!

dweeby

Hmm, yes, think I understand (I do understand and yes, it doe add up).

£87k at 5.22%, versus standard (un-discounted) rate of 6.99%.

5.22% £4541 + £159 = £4700
6.9% = £6031 so I'm much better off.

But, is there a much better deal??

Gorgeous_George

dweeby wrote: »

Good deal? we thin its ok (if not the very lowest interest rate).

Sounds good and I see you've also saved 20% on the word 'think'.

Seriously, that would seem to be a fair deal - using historical rates as a guide.

Looking to the future, I think it will be a reasonable rate as mortgage rates will not fall much even if rates drop in the short term. A tracker might be better but that is risky.

I'd probably have waited until after next week's MPC decision.

GG

dweeby

Gorgeous_George wrote: »

Looking to the future, I think it will be a reasonable rate as mortgage rates will not fall much even if rates drop in the short term. A tracker might be better but that is risky.

I'd probably have waited until after next week's MPC decision.

Thanks for all that, confirming our thoughts. We need the stability of a fixed, methinks.

I agree about the MPC next week, but need to sign up now for the house (I think - but will check). More than likely -0.25%, but when would (or in fact would) the fixed deals reflect this??