first direct 5.15% 10 year fix-is it too long?

allan673

hi, looking at fixing at 5.15% for 10 years with first direct fixed rate.
is this a good deal, and do you think its a good rate to fix at for 10 years?

we have no intention of ever moving house now, and are very happy here so i dont mind commiting for 10 years, just wondered if it was a good rate to fix at? - averaging interest rates out over 10 years???

cheers!!!

dweeby

allan673 wrote: »

just wondered if it was a good rate to fix at? - averaging interest rates out over 10 years???

We've just signed for a 5 year deal with FD, their rates are some of the very best.

Our reasons for fixing for 5 years is to give some stability for that period, I know that in 5 years we'll be better off - and so will take my chances then.

But 10 years? that's a different story. We wouldn't fix for 10 years, and if the last 10 years were anything to go by - you'd probably loose out vs a discounted tracker. Over 10 years, it's anybodys guess. Have a look:

here
or here
or better still, here

The recent trend has been downwards, but long term? who knows.

It's all down to your own circumstances really, so over to you...

Mortgages123

ask yourself the question "Can I afford the payments at 5.15% comfortably?"
If the answer is "yes" then why not go for it.

Would you kick yourself if rates dropped down to 4.5% for the next 10 years, effectively meaning you have possibly overpaid 0.65% for that time?

Regards moving home this is not an issue as you can take their mortgage with you if you decided to move home anyway. Any additional borrowing though would be at a different rate, possibly higher.

herbiesjp

Mortgages123 wrote: »

Regards moving home this is not an issue as you can take their mortgage with you if you decided to move home anyway. quote]

I know what you mean, but portability is not guaranteed.

Chaning personal circumstances and changing lender criteria can mean porting is not an option when iy may be needed.

Having said that the OP says they have no intention to ever move house

dwsjarcmcd

Mortgages123 wrote: »

Would you kick yourself if rates dropped down to 4.5% for the next 10 years, effectively meaning you have possibly overpaid 0.65% for that time?

Just to balance the above comment off, if rates increased to 6% during the next 10 years, then you could be saving 0.85% for the remainder of the period!

The truther is no-one can tell you therefore you should go on what your comfortable with, and by all accounts, the FD rate is very competative.

allan673

good point - cheers.
i guess no one can predict the interest rates over 10 years, therefore the 5.15% 10 year fixed rate doesnt sound a bad option, i only owe £57,000 so its probably worth doing???
any more opinions?

cheeky_lil_monkey

go with oneaccount, you're likely to pay it off quicker. OK, so their rate is higher, but the mortgage shrinker actually works. Depends on what your income etc. would be, but 10yrs is a long time and you get heavily penalised for overpayments/early repayment, whereas you might be able to pay it off a lot sooner and then with less interest with oneaccount.

silvercar

cheeky_lil_monkey wrote: »

go with oneaccount, you're likely to pay it off quicker. OK, so their rate is higher, but the mortgage shrinker actually works. Depends on what your income etc. would be, but 10yrs is a long time and you get heavily penalised for overpayments/early repayment, whereas you might be able to pay it off a lot sooner and then with less interest with oneaccount.

The FD offset works very similar to the oneaccount and there is no penalty for overpayment provided you keep the mortgage open. So you can completely offset your mortgage amount, have no monthly interest payments with no penalties.

As regards 10 yr fixing: I took out a 7 year fix in 1993, the rate was 8.65% (etched into my brain). At the time we thought it a good idea as we could remember interest rates at 14% a few years previous. It gave us the security of knowing that our repayments couldn't rise on what, at that time, seemed a large mortgage. In hindsight we lost out considerably.

Now 5.25 is a lot lower than 8.65, but 10 years is a hell of a long time.

brock-cruse

Hi
We had the same dilemma 6 months ago. Been in the mortgage paying game for 14 years so just about remember the days of threatening 10/12% rates but at that time we were in our first flat and fixed for 2 years at 10.6%:eek: . We moved in July 07 and have had to go down the route of going back to 25 years to afford the monthly payments. We decided that this was to be our last move (if there is a next time it will be to downsize) and have gone with Accord at 10year fix at 5.39% for 130K. There are heavy redemption costs of about 6k (not planning on this of course) but we think that its worth the knowledge that we know exactly how much we are paying each month. Perhaps its because of paying a mortgage for years, but I think that this is a good low rate and personally cant think that we are going to get much lower..but then anybody knows..I just remember that day when the rates went upto 15%. I consider that what I ampaying per month mortgage is the same i would spend on rent (if not less) and at least its my house.
However, the decision is yours!!

cheeky_lil_monkey

offset, thanks silvercar, my brain wouldn't remember the word!!

neiljc_2

ok first time ive tried to use a mortgage calculator.

fixed rate with Nationwide finishing in 2 months they have offered feefree loyalty 5 year rate of 5.63%.

We have a large equity in the house, mortgage sum £122000 on a £400000 value house.

If I switched to First Direct and took their 5 year fixed at 5.25% I work out thet they compare as

First direct

repayments 874.26 x 60 months = 52455.60
Fees = 700.00

total 53155.60

Nationwide

repayments 899.75 x 60 = 53985.00

No fees

Have I done this right?

I assume I can offer to pay the fees upfront rather than having any added to the loan?

also I am currently working part time so using the basic 2.5 x income math our amount based on salary is £120,000.00 is this likely to be a problem with First Direct?