Fixed Rate - 2 Or 5 Year Deal

davepugh1981

Just make sure you don't leave it too long as a remortgage can take longer than you think if the mortgage company are busy - or the valuers are busy etc. You don;t want to have to pay the Reersion rate whatever happens

TTFN

Ian_W

Innys Wrote:
I think I'll be taking a gamble that rates come down - they are bound to at some point in the next two years - and go for the tracker. If they stay as they are, and I still go for the tracker, it'll end up costing me an extra £300 odd over two years, which is a risk I'm prepared to take.

The markets obviously think they're coming down sooner, rather than later.

However, 4.75 is still quite low historically so whose to say they won't go above that in the next 2 years, in which case £300 odd would not be the limit of your risk. :mad:

Just a thought! Particularly as all the wise men [& women, of course] were saying only a few months ago they'd be between 5-6% by next year. :eek:

dwsjarcmcd

The price of swap rates is basically flat right now, which means that the predicition is for rates to remain pretty much as they are just now (with the odd quarter point rise/fall) for the next 10+ years. I can't remember a time when 2, 5 and 10 year rates were priced so similarly. I think that if you need stbility of payments, there has never been a better time to fix over the longer term.

Ian_W

Agree there's never been a better time to get a long term fix. I'd fix for a longer period now if circs allowed, as I'm more towards the end than beginning of the mortgage, and a little [comparatively cheap] certainty is nice as you get older!

BUT - Phew - I'd also take a fairly hefty punt that that interest rates will go under 4 and/or over 5.5 within the next 10 years - do you know if Ladbrokes will give odds on it?

DiggingOut

Long term fix may not be good if you think you will move house or possibly repay (bonus or inheritance) before the end of the term -- could get hit with hefty penalties.

But unless things change in the next three months, I'll probably be looking for a five year fix myself. And I've never gone fixed before. I think it is a great time to do so. The rate cut is priced in, no one knows whether to expect another for sure or not. I'm dubious, the American economy is still strong. When America sneezes, the world's economy catches a cold, when it is going strong, everyone else benefits. I don't think we're headed for a recession or a housing crash -- just a slowdown, with enough inflation to keep BOE from slashing rates too far.

My opinion only, no better or worse than anyone else's, probably.

salsa1

Does anybody know what happens if you take out a 5 year fixed and then need to borrow more for home improvements.

What happens if you move house?

Prudent

Some fixed rate mortgaes you can take with you if you decide to move house.
I have a fixed rate mortgage with Northern Rock which is portable. I can take it (and increase if I wish) if I move.
It is also a flexible mortage which means if you do come into any money you can repay almost all of it without penalty.I have done this with mine. I now pay just £1 per month. If you pay off in full there are redemption penalties.

When I took the mortgage they were offering fixed rates for two, five, seven and ten years. When I looked recently on behalf of a friend, the mortgage was still on offer. My rate was 4.99 for five years. I don't know what it is now.
It could offer you a fixed rate without some of the pitfalls that have been highlighted.

Ian_W

Moving is covered by Prudent - most seem to be portable these days [don't want to lose you I suppose] but you need to confirm the deal you're after is.

Had a fixed rate a few years ago and you could borrow extra at a higher interest rate - lower than SVR, but not as good as the fixed :mad:.

Explanation was that the original advance was "bought-in" from the money markets at a rate but once that "tranche" had gone to initial applications, it was gone. :rolleyes: Interest rates had gone up in the meantime so I don't suppose it was reasonable to expect a further advance at the lower rate. Again, it's something to check with the lender you're interested in.

Luis

I too am nearing the end of my fixed 2yrs at 4.1% - Oh how I wish I had 5 yrs! Anyway, Woolwich have offered me a fixed 2 yr at 5.1% on my remaining 81k - not a remortgage, just resetting the terms, so is fee free. This bunks my monthly payments up by about £50 to about £500. Does this sound reasonable, or am I better waiting for a few weeks to see if something better comes along?

Ian_W

Nationwide has some good fixed rates at the moment, there are fees but they're fairly reasonable - see website
On the face of it, without knowing how long you have left on the mortgage, they LOOK as if they'll beat your quote. But the calcs are there for you to do the sums yourself.
They'll pay your valuation & legals but charge an arrangement fee & re-mortgage admin fee, or you can pay a higher rate and waive the arrangement fee. If you pay the fees they're obviously "up front" but would add the equiv of £20 [24mths], £13 [36 mths] or £8 [60mths] if you compare with the Woolwich monthly payment figures you have.
I'd also call one of the brokers on the mortgage pages of this site and get a free quote off them, some deals are only available to brokers [eg. Halifax have a 4.29 2 yr fixed but the fees are pretty steep and you'd need to factor them in to get a true comparision with the Woolwich].
If you do get something better I'd still go back to your lender and see if they can beat it. You never know?