5 or 10 year fix? Can't decide!
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sheepy21
Posts: 221 Forumite
Please bare with me, it's a little complicated. We're ftb, so completely new to all this.
We were planning on a 5yr fix with RBS, we have a 20% deposit and can get a 2.1% interest rate (£573 a month). We're now considering a 10yr fix with Nationwide, with a 25% deposit and interest rate of 2.79% (£588 a month).
Here's the tricky bit, my husband earns 25k, I don't earn anything as we have a nearly two year old who is autistic, we get dla and carers for him, along with tax credits and child benefit. The dla and carers is guaranteed for two years, we then have to reapply for both. As he has a lifelong condition we anticipate that we'll continue to receive dla and carers for many years to come, but can't guarantee it. If we lost my income, as far as I can work out, in 5yrs we wouldn't be able to remortgage as our income wouldn't be high enough. We find this frightening as god knows what our payments would jump up to.
In order to up our deposit to 25% for the nationwide mortgage, we'd need to borrow 12k from a family member.
So, do we rely on just our own money and fix for five years, hope we've kept my income and have more disposable cash? Or do we fix for ten years, be more cash strapped for 3-4yrs BUT know that we can afford the mortgage for 10yrs even if we lose my income, and at the end of 10yrs I could probably get a part time job if needed?
Thoughts and opinions welcomed! Should also mention that due to our income situation, we only have a choice of about three lenders :eek:
We were planning on a 5yr fix with RBS, we have a 20% deposit and can get a 2.1% interest rate (£573 a month). We're now considering a 10yr fix with Nationwide, with a 25% deposit and interest rate of 2.79% (£588 a month).
Here's the tricky bit, my husband earns 25k, I don't earn anything as we have a nearly two year old who is autistic, we get dla and carers for him, along with tax credits and child benefit. The dla and carers is guaranteed for two years, we then have to reapply for both. As he has a lifelong condition we anticipate that we'll continue to receive dla and carers for many years to come, but can't guarantee it. If we lost my income, as far as I can work out, in 5yrs we wouldn't be able to remortgage as our income wouldn't be high enough. We find this frightening as god knows what our payments would jump up to.
In order to up our deposit to 25% for the nationwide mortgage, we'd need to borrow 12k from a family member.
So, do we rely on just our own money and fix for five years, hope we've kept my income and have more disposable cash? Or do we fix for ten years, be more cash strapped for 3-4yrs BUT know that we can afford the mortgage for 10yrs even if we lose my income, and at the end of 10yrs I could probably get a part time job if needed?
Thoughts and opinions welcomed! Should also mention that due to our income situation, we only have a choice of about three lenders :eek:
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Comments
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Our mortgage is up for renewal. We did a 2 year fixed rate last time but now I want something a little longer. Following for advice!0
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If you don't want to have to look for a new deal every few years have you thought about a tracker mortgage? All the signs are that mortgage rates will rise slightly but not to anything like the historical average values.0
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If you go for a mortgage today based on current circumstances then you may be able to transfer to an alternative rate with the lender when the initial deal expires on a like for like borrowing with little or no checks on income.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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Personally I would go for the 10 year fix. Its what I want to do when my current deal expires next year. I think 2.79% for a 10 year fix is an incredibly good rate the likes of which we may never see again.
Or rates may stay low for another 10 years and you would be better off with a tracker, its a gamble, but for me I would be happy to have the safety net.0 -
As a FTB I would never go for a 10 year fix.
When i was a ftb we made the mistake of going for security of a 5 year fix. We could have got a much better rate on a two year deal plus after 3 years and with two kids found we needed a bigger house.
It cost me 6k to get out of the 5 year fix so we could move. I am now going for a 5 year as we will be staying in this place for 20 years. I still wouldn't consider 10 year as its too long and you dont know what could happen.0 -
As a FTB I would never go for a 10 year fix.
When i was a ftb we made the mistake of going for security of a 5 year fix. We could have got a much better rate on a two year deal plus after 3 years and with two kids found we needed a bigger house.
It cost me 6k to get out of the 5 year fix so we could move. I am now going for a 5 year as we will be staying in this place for 20 years. I still wouldn't consider 10 year as its too long and you dont know what could happen.
This is a good point but most fix rates are portable so you can carry tge rate over to a new house with no fees. So if going for the 5 or 10 year fix check that you can port it if needed.0
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