10 year fixed?

squibbs25

I hope someone can answer a couple of questions for me.

Our mortgage deal with the Halifax is due to end 30th June, we are on a 5 yr fixed rate @ 4.99.


I've been in touch with a broker who has found a 10yr fixed rate for cheeper than my existing deal.
Current mortgage £55,000 @ 4.99 over 25 yrs
extension on mortgage £5,000 @ 5.29 over 10 years
Monthly total £381 pm

New deal with the Woolwich will be for £60,000
on a 10 yr fixed rate @ 5.59, monthly payment £377 over 25 yrs
or 10 yr fixed rate 5.59, monthly payment £422 over 20 yrs

The broker has suggested taking the 25 yr deal and making overpayments, rather than taking the 20 yr term.
Does this make any sense?

I thought the idea was to decrease the mortgage term.

Would there be a lot of differece on the interest on either of the suggestions?
The other thing is hubby is uncertain of taking a 10 yr deal.
With the uncertainty in interest rates hes scared of tying us in.
I do understand that the interest might drop but Halifax have just uppped all their rates by 0.5 :eek: , so surely more lenders will follow suit.

The new deal will be portable, flexible (whatever that means) and accept overpayments of 10%.
I don't yet know what the penalties or early redempion fee's are.

Sorry for so many questions, does anyone have any advice?
Has anyone else taken or going to take a 10 yr fixed?



The broker is coming to see us tonight. He's a whole of the market, independant broker, i feel he has found us a good deal, what do you all think?

Also is there any other questions you can think of that i need to ask him tonight?

Thanks for reading.
Squibbs

Gambler

I think the 'not sure of rate' comment is frightening. This is the most important factor that people will need before passing comment.

squibbs25

I forgot to write it down he did mention it! I will give him a call and ask him.

squibbs25

the Woolwich deal rate is 5.59

beecher

The rate must be 5.79% or thereabouts. Is there a admin fee involved, as that could make quite a difference if it is hefty. Halifax are doing a 10 year deal of 6.29% with no fee so if you have one, it is worth comparing the difference.

I don't really get the point in making the deal over 25 years and overpaying the difference on such a small mortgage. You'd be best to try to cut the term now rather than later on. Seems an odd thing to suggest if you aren't struggling with payments -the temptation would always be to stop overpaying if unexpected bills come in.

As for the 10 year rate, I'd only be concerned if you plan to move in the next 10 years (and even then, since it is portable it shouldn't really matter). I don't think interest rates are heading downwards for a while, but of course no-one knows for sure what's going to happen in 1 year let alone 10! You could maybe find out what 5 year deals are about, and compare them?

formerchamp

Hi Squibb23

Since there is no difference in the interest rate for either 25 or 20 years I would suggest your adviser is trying to offer you some flexibility.

If you take the 20 year offer you will have to pay the £422/month if you take the 25 year offer you can choose to make the £422/month. In either case you could always pay even more if you can afford it.

Without knowing more about your personal circumstances it is hard to say if this is a great deal but it sounds fine as far as it goes.

My mortgage is with the Woolwich, you have to do the maths carefully, they have a tendancy to charge really high arrangement fees and the like and then build them into your mortgage. Instead of having a mortgage of £60000 you end up having a mortgage of £60499 (or similar) and believe me (or one of the MSE calculators) you do not want to pay interest on the arrangement fees for the next 20-25 years, pay them upfront if you can possibly afford it.

Best of luck.

beecher

If the rate is 5.59%, the arrangement fee must be close to £1000. I would only go with it if you can pay if upfront. The Halifax 10 year deal of 6.29% would cost you £439.96/month - the difference does add up to more than £1000 over 10 years, but not if you're paying interest on that £1000 for the next 20/25 years. Does that make sense?

squibbs25

from what i understand with the woolwich there are no solicitors or surveyors fee's, but a £995 fee.
It's so hard to understand it all ,

We can afford our normal payments, we don't often overpay, if we do it's never anything substansial. Normally an extra £20 here and there.

Hubby is the breadwinner, i work about 6 hours a week (nothing special), and that helps towards our childrens hobby's (daughter does tap and ballet, son has piano lessons and attends a saturday morning music school) so we dont tend to make overpayments.
Every now again i clear out the penny jar, and add that to the mortgage fund.

formerchamp

£995 yikes! I know they will add it to your mortgage but you really don't want to. I would be asking your adviser why he thinks it's the best deal for you since there are others around with much lower up front costs.

Only my opinion but if he convinces you it is the best deal you might want to think about doing the 20 year term though, I know if it was me that I would make the payment if I had to but if I had a choice I wouldn't! If you really think you can afford the higher amount normally it might be worth biting the bullet. The extra cost now might seem like "that could buy tap shoes next month" but just check out how much the extra 5 years will cost overall and I know it would be worth it.

squibbs25

One of the things i dont understand is that when i was in the Halifax on Saturday for the Mortgage review, the lady was not very forthcoming with information. Every question i asked her she was unable to reply, well she actually relpied with "i'm unable to advise you on that!"

With the little info she did give us, the mortgage total left is around £54,000 and the payments on that,on a 3 yr fixed rate of 5.99 (old rate before increase this week) £409.69 THEN add about £50 pm for the extra to make it up to £60,000.
To secure this deal a fee of £699 is required.

She gave us information another deal of
3 yr fixed at 6.290% (again before rates went up) monthly payment £422.32 then again add about £50 pm to make it up to £60,000.
Arrangement fee on this is £499

I am really confused now!

squibbs25

formerchamp wrote: »

Hi Squibb23
If you take the 20 year offer you will have to pay the £422/month if you take the 25 year offer you can choose to make the £422/month. In either case you could always pay even more if you can afford it.

We can afford the £422 pm, also if the mortgage goes to SVR it will be about £420 ish thereabouts (according to advisor the other day, again all pre Halifax upping rates) BUT that is without the extra top-up.