Special Briefing: Fixed v Discount

johnny_b_5

There are clearly a few of you out there, who know about fixed/ discounted .....
Could i please ask for your valued oppinions......
I've got a 75k mortgage. 25k (recently taken out ) on fixed till 2012. Other 50k was on fixed for 3 years which runs out 31st May 2006. I need security because i could not afford a big jump in mortgage payments. I've only been on 2/3 year fixed in the past and i'm considering 10yr fixed. Currenty with Yorkshire...... Any others i could consider....and is it worth the trouble...

Many thanks in advance....

Ian_W

arothwell,
Doesn't sound feasible to me at all. First off most fixed [certainly the better rates] have an arrangement fee of typically £4-600, though many do offer free survey and legals so interest rates would have to rise quite dramatically to recoup that - especially as the interest you earn will be taxed. Secondly, most fixed deals limit the amount you can overpay - again a typical figure would be no more than 10% of the loan pa - otherwise you're hit with early repayment penalties.

If you can remember the deal it may be worth looking again with the actual figures. But if you borrowed at 4.5% fixed [around market leading rate] and received 7% [a full 2% above the best currently available] the money from the savings account it would make, after basic rate tax £1100 per £100,000 borrowed and a higher rate tax payer would still be out of pocket. You'd need to have a huge mortgage to make your fortune on that one!!

tomstickland

Interesting thread this - I pondered fixed vs variable a few weeks back when I had to make a decision on my FTB mortgage. I read Martin's previous article and on his advice I should have gone variable. ie: I will easily be able to afford any increases in monthly payment. However, after a lot of thinking, I decided that I wanted the surety of a fix for 2 years. I also realised that it was a fairly arbitrary decision, which is why it was so difficult to decide. Both a fix and a variable give you a chance of paying more than you could have done. I made my decision in the end by comparison with a monthly rent. If the landlord said £480 per month fixed for 2 years then I'd take it. If he said £480 per month tracking the BOE base rate then I'd think "why not just give me a fixed price?".

Ian_W

johnny b,
If you can't afford for rates to rise then fixing is best IMO but 10yrs is a hell of a long time. Lots of things can change and you're very much at the whim of your lender if you need to borrow extra to move [assuming it's portable], extend or raise capital on your property for other purposes. Personally, I wouldn't fix for more than 5yrs but part of yours is already fixed to 2012. What I don't understand is how you could move to another lender w/o incuring penalties on this part of your mortgage? Or is that a second charge with another lender?

arothwell

Thanks Ian,

Since I cannot come up with the mortgage supplier and the full figures I suppose this idea has to be a non -starter, especially after your debunking. Shame, though.

Cheers,

Alan

johnsmclean

Ian_W wrote:

johnny b,
If you can't afford for rates to rise then fixing is best IMO but 10yrs is a hell of a long time. Lots of things can change and you're very much at the whim of your lender if you need to borrow extra to move [assuming it's portable], extend or raise capital on your property for other purposes. Personally, I wouldn't fix for more than 5yrs but part of yours is already fixed to 2012. What I don't understand is how you could move to another lender w/o incuring penalties on this part of your mortgage? Or is that a second charge with another lender?

This is the conundrum that we have.

I thought I had it sorted out in my head. We can't really afford to have our payments rise by much as it would cause us problems. The obvious suggestion is that we fix for ten years at 5.4 % and we can budget for and afford this and it would see us through to nealry the end of our mortgage.

But as pointed out above it is an awful long term and we may want to borrow more to spend on the house etc.

Oh my God my brain hurts, need to think again on what to do.

poundhappy

I have just bought a new house and am sorting a new mortgage. My dilemma is, do I go for a 5 or 10 year fix? It will cost me £6 more a month for a 10 year over a 5 year. Whatever I do will be a gamble, as no-one can foretell what the market will be like in 5 years time.

I would really like to hear your ideas.

In response to the post above, there are 10 year deals of 4.79% with Nottingham or Leeds, and deals of 4.88% with Nationwide or 4.99% with Northern Rock or the Woolwich, which would be better than your 5.4% one

Darryl

MarkyMarkD wrote: »

A nice site which shows 5 year swap rates (and a graph of their movements) is http://www.cavendish.propertymall.com/markets.php.

Does anyone know where this site/page that MarkMarkD posted a link to is now?

I used this site a few years ago to help inform my fixed or discount decision and it has proved to be spot on (for me).

Darryl.

gehngus_2

Hi.

1st question is which link took me to the site that gave a list lenders, deals and most importantly to me total paid over the life? this seemed to make more sense to me. i would rather just pay less overall (and still get a better rate).

I think i should be looking for the lowest tracker or variable?

I don't claim to understand any of this now that i've read it all.

I need to change my lender. (or get them to reduce my payments)

INITIALLY THIS WAS A SELF BUILD MORTGAGE.

the house is built, the fix in time expired over a year ago and ive been looking around at other deals.

But, after reading all about mortguages on this site last year i got cold feet (basically i got the idea that i was going to get charged for something i might not need) and so i thought id be best going into hybernation until it made more sense.

It still doesnt make any sense, but im pretty sure im on a bad deal.

I have a 56k loan on a 200k property with 20 years to go.
im on skipton variable rate (6.890%) and pay £416 per month.

ive seen other variable and tracker rates around £385 (no discounts etc) but none show the real numbers. how much i pay over the life (you know, the total repayment inc costs in pound notes).

where do i get this info ?

am i on a high standard rate?

thanks in advance
Geh

mightymouse

Darryl wrote: »

Does anyone know where this site/page that MarkMarkD posted a link to is now?

I used this site a few years ago to help inform my fixed or discount decision and it has proved to be spot on (for me).

Darryl.

Hi

Does this help?

http://swap-rates.com/UKSwap.html