First Direct - 5 or 10 year fix?

tinkerbell84

Had approval in principle for a remortgage with First Direct this morning. :j :j

Only have until Thursday to decide whether to go for the 5 year or 10 year fix? 5 year fix is at 5.39% and £900 fees, 10 year is 5.49% and £700 fees.

We plan to offset as much as we can anyway to reduce the interest payments, but wonder which option people think is better to go for?

TIA

Tinks xx

allan673

they are both really good rates - its whatever you feel comfortable with really, i grabbed the 5.15% 10 year fix they were offering in february, and it was all completed nearly 2 weeks ago.
i just wanted security as no one knows what the future holds for mortgage and interest rates.so i opted for the 10 year fix - im happy doing this.
i have noticed more and more people are looking at 10 year fixed rates now.

my re-mortgage timeline from start to finish, it may help you ?

good luck

tinkerbell84

Thanks Allan - our re-mortgage isn't due till October so we have loads of time. Just didn't want to lose out on the good rates at the moment. We couldn't have gone for the Feb rate as it was to9o far in advnce for us

I already have a FD 1st account and OH ran through his application yesterday.

Think we'll probably go for the 10 year - at the end of the day we'll actually control the rate through our offsets, so 10 years of stability might be a good plan.

:beer:

medic1978

tinkerbell
Can you apply this early if your remortgage isnt due until October? How long will FD hold the rate for? I will need to remortgage in Dec

Mathsguy

OK well it all depends on how much you're borrowing and what you attitude to risk and uncertainty is.

I've done a bit of maths here and it looks like if you're borrowing over £150,000 over 25 years then you'd be better off with the 5 year deal (and then getting another 5 year at the same rate afterwards), but if you're borrowing less than £150k, then the 10 year deal is better because although the rate is slightly higher, the fee is smaller and you only pay it once (you'd pay it again after 5 years to get another fixed rate deal)

HOWEVER this all assumes that nothing changes between now and April 2013 and all the same deals and charges etc are still around, and this is what I mean about what you attitude to risk is. If you think things will improve and mortgages will get cheaper in the future then you should be swayed towards the 5 year, but if you like certainty and no surprises for the long term, then the 10 year may be more preferable.

Gorgeous_George

My maths shows there is little difference and it is all down to how long you want to be fixed. I'd go for the 10 year deal.

There is little difference in the rates. 0.1% is only approximately £6 per month per £100,000 borrowed. The fees are also not significantly different but adding both to the relevant deals makes the monthly payments differential less than a fiver per month.

It is all about where you think rates will be in five years' time and how much you enjoy the mortgage switching process. Take the ten year deal and relax.

GG

tinkerbell84

medic1978 wrote: »

tinkerbell
Can you apply this early if your remortgage isnt due until October? How long will FD hold the rate for? I will need to remortgage in Dec

yep. they'll fix it for 6 months. shame we couldn't do it in feb though - the rate was even better!

allan673

what have you decided on tinkerbell84 ????????

tinkerbell84

10 year fix I think :beer:

dimbo61

good for you tinkerbell84,
now something to focus the mind.
do you think you could overpay and offset the mortgage so that it
would be paid off in ten years.
Keeping the same payment each month no matter how much is in the offset
and overpaying with any little extra money you might get will soon reduce
your mortgage and who knows this maybe the last mortgage you need !
GOOD LUCK

tinkerbell84

Thanks!

Not planning to pay it off in 10 years, but we're planning to offset as much as we can. planning to make monthly payments of double the interest part and if we can offset money (selling relatives' kidneys etc) then we should get a fair bit paid off.

I'm not a mortgage free wannabe - I doubt we'll be in this house forever. just good to know how much to pay for a whole 10 years!