First Direct 5.5% 10 years? Wait or Get it Now?

TheRookieGB

Posted - 13 april 2008

Hi, I'm pretty new to this web site, but as I WAS self employed for 4+ years I do know how to manage my money a little. (or think I do?)

Anyway, Heres the crunch or my matter ....

I Have 63k Mortgage with Nationwide that ends in MAY 31st fixed rate of 4.39!!! I only have 14 years left. However we now have a little one and want to reduce our payments, maybe with savings offset or by paying off the money on the mortgage.


My wife and I are now looking at First Directs Offset Mortage at 5.5% fixed for 10 years.

Having NRock fixed in 1997 at 7.5% for 5 years makes 5.5% look good. The 4.39% at Nationwide was probably one of the lowest mortgages around at the time 5 years ago also.

Anyway .... DO WE FIX NOW AT 5.5% for 10 years? or leave the mortgage until this credit crunch rubbish has gone and then see what is happening?

With the base rate at now 5% and the eccomny looking grim I can only see the base rate dropping again. However the banks aren't dropping there motgage fix rates as well, some are rising. If I miss this 5.5% now will I regret it?

This is a nightmare, The only relief I can see is that 5.5% 10 years is still a pritty good rate even if the rates drop to 4.5%. Its even better if in 6-8 years its at 7%.

We may move house in 3-4 years time but FD said this won't matter, is this true if we stay with them?

I'm think of the 10 years for stability with our new family, as I don't want the rate to be 7% in 5 years and then wished I'd fixed it for 10.

ANY ADVICE ON THIS WOULD BE GREAT, IT WOULD HELP CLEAR MY MIND.

IF IT WASN'T SO MUCH ON THE NEWS WITH THE GOVEMENT MOANING ABOUT THE MESS WITH THE BANKS I WOULD HAVE DONE THIS ALREADY.

:money: I'm a first direct customer so I have been offered a mortgage.

I await some expert advice asap.

many thanks

THE ROOKIE GB

dimbo61

hi rookie gb
I have an offset mortgage fixed for 5 years and they are great !
saving into the offset is a great way to reduce the mortgage quickly and building up an emergency fund/ retirement fund.
they are very good for self employed people as its a good place to keep your TAX money till you pay the tax man.
It gives you stability and with luck you may have the mortgage paid off within the ten years I would bite there hand off on monday and start saving
into the offset GOOD LUCK

TheRookieGB

dimbo61 wrote: »

hi rookie gb
I have an offset mortgage fixed for 5 years and they are great !
saving into the offset is a great way to reduce the mortgage quickly and building up an emergency fund/ retirement fund.
they are very good for self employed people as its a good place to keep your TAX money till you pay the tax man.
It gives you stability and with luck you may have the mortgage paid off within the ten years I would bite there hand off on monday and start saving
into the offset GOOD LUCK

Cheers for the reply, I'm not Self Employed Now, do to the last 10 months of Poor Trade and the downturn in the ecomony I closed my flooring firm, (noone has any spare cash anymore, bills etc.) With our new family I had to get a new PAYE job. Now Have this and love it and the regular pay.

I still have My Tax money from last year in a ISA so may move this as well. Cheers for your advice.

Do you think the rates will drop more in the next 3 months? Bank Fixed rates?

[Deleted User]

It's such a personal decision. We just fixed with FD at 5.34% for 10 years. I can only see the fixed interest rates going up in the short-medium term and I wanted peace of mind. The offset feature makes it even more attractive. Good luck!

TighterThanTwoCoatsOfPain

I fixed when they were offering the 5.15%, snapped their hand clean off! lol.

tbh, i think i would still take their 5.49% too.. Love my Poker / Casinos etc , but would never gamble on struggling to pay the mortgage.

I'm a stability all the way man.. We're in the house we'll stay in for the foreseeable, we're thinking sprogs in a few years, so this defo sealed the deal. Plan is to have the sprog, a couple of years off work for the other half, and get her back to work for a couple of years before having to re-mortgage

dimbo61

hi the bank of england may well cut the BOE rate by 1/4 or 1/2 % in next few months but the question is will the mortgage companies follow !
You mention new family can you afford the mortgage at 5.5% for 63K and
if you have extra fill your ISA allowance braclays at 6.5% this year.
then if things get tough you can use some of your ISA,s or offset money
to tide you over . GOOD LUCK

TheRookieGB

Thanks for all your replies.

After many discussions and racking of our brains ....

Its looking more that we will use our saving agianst the 63k, be it as offset or as a payment to drastically reduce the monthly payments.

For example: No offset =£440+, 20k Offset = £380+, 20k payment, £270+

(monthly payments on the current rates.)

I know that payment means you don't have the captial savings anymore but the monthly payment savings are nearly £170+!!!!

If then when I get any pay rise in the future I could increase the payments to savings with FD as an extra offset or into an ISA?

If I wait and the percent drops by 1/2 percent its not going to make that much difference to the lower £270+ payment a month.

My only questions left now are, what happens if I move house? And what are the repayment or stopping fines.

Keep replying and voting. I have until wednesday!!!


Cheers ALL

TighterThanTwoCoatsOfPain

TheRookieGB wrote: »

My only questions left now are, what happens if I move house? And what are the repayment or stopping fines.

Can only speak for mine, but ending the mortgage is 3% of the ORIGINAL balance. Personally, i actually think thats not too bad.

Some people think thats alot, but i think its actually reasonably in line with, and depending on your balance, MUCH cheaper than some others. Given the set up fees are so tiny, i think its more than fair.

Moving house? Not much at all. Legal costs, and maybe a set up fee if you're borrowing more.

tbh, these are questions you need to check with them..

TheRookieGB

Hi, All

Many Thanks

I have decided to go with this Mortgage at Fdirect 5.5% 10 years.

Now Looks too good to be true, lets hope it is.

Thanks for all your help and advice, the poll is still active until Wednesday.
But its looking like a 90% vote for YES Do it!

Hope you all find what you want also.


Cheers Martin Lewis for a great site.