What do you think of the advice ive been given?

keeno

Hi all

My deal is due to end very soon and ive been in contact with my advisor. Here is the details of what I need.

Property value : 200,000
Remorgage amount : 128,000

I want to take this out over 28 years on a fixed repayment mortgage. Ive been advised to take it out over a 2 year fixed rate as my advisor thinks the market will be a lot more stable by then.

The fixed rate being offered is from halifax at 5.99% and will mean paying back £792.69 per month.

Anyone have any views on this or think there is a better deal out there? Ive been looking on sites like moneysupermarket but the information does not seem up to date.

homer_j_3

How long do you forsee yourself in your property, how long would you be comfortable with a tie in?

How much more a month could you afford comfortably?

paulb369uk

Had the same advice from my FA to go for a 3yr fixed at 5.70% Abbey but tbh the set up fees are £999 and in 3yrs time it will probably cost me the same again so I am going with FD on a 5yr fixed at 5.29%. Not saying this is the best thing for you but since my last fixed rate at 4.99% it has only gone up 1/4 of a % !!

keeno

I plan to live in this house for a very long time. took a lot of effort to get here and is an ideal home.

I had really budgeted for between £750 and £800, paying much more would be a struggle tbh. I really dont want to go interest only as I want to pay off the mortgage and decrease the morgage term as I go.

Im 28 now, so if i reduce my term at each renewal ill be 56 by the time i pay it all off If i get to 56 that is :beer:

keeno

paulb369uk wrote: »

Had the same advice from my FA to go for a 3yr fixed at 5.70% Abbey but tbh the set up fees are £999 and in 3yrs time it will probably cost me the same again so I am going with FD on a 5yr fixed at 5.29%. Not saying this is the best thing for you but since my last fixed rate at 4.99% it has only gone up 1/4 of a % !!

I was also looking at FD but they have closed their doors atm. Im honestly considering going onto my existing lenders base rate for a month or 2 and see how the market goes. I would hate to get a deal now and see the market improve in a month or 2.

homer_j_3

No that is fine keeno, I was just seeing if a tracker may be better for you but if you want security of fixed payments then fixed is the way for you.

I would be looking longer term than 2 years as you will have the exit fees and arrangment fees again in 2 years. To say the markets will be more stable in 2 years may seem a fair comment but if rates are at 7 or 8% to keep them stable then you will be kicking yourself for not fixing longer.

I would always recommend that people tie themselves in for as long as they feel comfortable and to really think about anything that may want to do in that time which may require a change of property. If you are confident that you will be there for 5 years, go for a 5 year deal, if you are not confident of 5, look at 3.

2 is too short in my opinion, especially if you know you will not need to move again in that period.

The cynical side of me says your broker is just looking for repeat business but there may be good reasons for their advice - however hard I find to see it from the information presented so far.

keeno

Hi Homer

Thanks for the reply. This is my 3rd time with this broker, and to be fair he is a really nice bloke, always has time and i really think he is doing his best for me.

Any deals on the market you would consider? Also, what do you think of my idea on waiting a few months and going onto my existing lenders base rate? I can take the hit for a couple of months if needs be.

homer_j_3

I think that you should never pay the variable rate if possible and getting a deal now is the best thing to do as deals are being withdrawn daily.

My concern with the advice you have been given is that there does not seem to be any justification to why 2 years is better than 3 or 5 years for example. I have asked if you would need to move and you have said no. On this basis, I cannot see why a 3 or a 5 year product would not be more suitable for you.

Without knowing full details, I do not know what you qualify for so for me to indicate what rates are out there is impossible. I would say that you may need to pay a slightly higher rate and maybe even arrangement fee (may being the operative word) however at £200 a pop for exit fees when you remortgage and potential arrangement fees on the next deals you have to take in 3 years, it doesn't take a lot to realise that remortgaging every few years is going to get costly.

I am sure that you have been very happy with the service of your broker but I am struggling to see why there hasn't been any conversation for not fixing for longer.

keeno

I actually did ask hime about taking it out over a longer term and he said that in 2 years time he thinks there will be better deals around.

Its a risk and im not sure what to do tbh. This is the 1st time ive ever researched properly and its proving to be very stressful.

Dan_Collins_2

Halifax have that same rate over 2, 3 and 5 years. All with the same fee. I think 5 years gives you better value for money as it is less per year fee wise. I dont see rates being much lower in 5 years to be honest. 2 years will be over in a flash!

You also have to look at how long you intend to live in the property and any plans that may change your mortgage. You can pay 10% per annum off and change the term when you like, a small admin fee with be charged for the term change though.

Good luck

keeno

Hmm

Ive just been looking on the halifax site and have found a deal at 5.64% over 5 years. I think this would be a better option?