Fixing Mortgage - Which of these deals?

darrenwis · 3 November 2018 at 5:24PM

Hi all,

We have £110,000 left on our mortgage with Nationwide and our fix has come to an end. After looking around a bit we are going to stick with Nationwide and just change the product.

Probably looking at a 2 or 3 year fix (heading towards a 3 year)

Our options would be:

A). 3 Year Fix - 2.09% - No product fee - £419 a month - Balance left after 3 years - £101,690

. 3 Year Fix - 1.79% - £999 product fee added to loan - £407 a month - Balance left after 3 years - £102,235

C.) 2 year Fix - 1.99% - No product fee - £414 a month - Balance left after 2 years £104,485

D). 2 year Fix - 1.59% - £999 product fee added to loan - £396 a month - Balance left after 2 years - £105,085

We want fixed term for some peace of mind during Brexit etc and can't afford the product fee up front. We are a family of 4, 2 and a half year old and a new born.

Any advise or recommendations on the above? Which would you go for A, B, C or D?

Thank you in advance.

Darren

FIRSTTIMER · 3 November 2018 at 7:37PM

This is interesting - I am in a similar position with First Direct with a mtg circa £140k. Most have advised me to look at taking out the 2 yr fixed which is around 1.79% as the interest I accrue is going to be much less than taking out a 2.2% 3/5 yr over the two years. However, I have noticed that metro bank have a 5 year fix with a £499 fee at 2.04% which I am VERY tempted to go for.....as I think in another two years we will be looking at rates circa 2.5% at average LTV values.

getmore4less · 3 November 2018 at 7:38PM

The 3 year deal is close but no fee is better.
Max you can save on the lower rate is £990 if you were interest only.

2y max is £880

You can't cover the fee.

FIRSTTIMER · 3 November 2018 at 7:38PM

I think product fees around 1k are not good either - I use this website in addition to money facts to gauge what I end up paying in total over the fixed period. Quickly realised fee products are a non starter for me unless the fee is circa 500 MAX

[Deleted User] · 3 November 2018 at 8:20PM

Out of that lot I'd go 3 years @ 2.09%, agree with above RE: fees - only worth it if you have a large mortgage. I think on some examples I did with work, £1k fee was best for over £200k.

Also if you do see a decent product fee deal (I doubt it on 110k, but maybe possible if good incentives are provided) and you can't afford it upfront, consider adding it to the mortgage and then overpaying in say 6 months to knock the fee off the balance and stop paying interest on it.

That way you've effectively got yourself the fees product (which MAY be better for you) and just borrowed the fee @ say 2% for 6 months. Credit repair are more known for crazy fees (£1,495 etc!) so that "trick" can really help with affordability

dimbo61 · 3 November 2018 at 8:30PM

You are trying to compare apples and pears.
IE 2 year deals and 3 year deals ?
We have No idea of your circumstances or type of property, completely different ( Views ) if it was a studio apartment or 3 bed house with garden.
London or Leeds, planning family or happy single.
You need to look at the Big picture !
A newly married couple who Need the security of a 5 year fix with 2 kids planned in the next 2/3/4 years
OR young professional buying first property with plans to move up every 2/3 years.

darrenwis · 3 November 2018 at 10:05PM

Ok some more info, we have a 3 bed semi detached in Wales.

Family of 4, 2 and a half year old and a new born.

Does that help at all?

darrenwis · 3 November 2018 at 10:07PM

getmore4less wrote: »

The 3 year deal is close but no fee is better.
Max you can save on the lower rate is £990 if you were interest only.

2y max is £880

You can't cover the fee.

Ok, so are you saying the 3 year fix with no fee would be the better deal for me?

Thanks,
D

dimbo61 · 4 November 2018 at 10:28AM

Again planning Darren.
In 3 years your oldest will be 5 and at school so little if any childcare costs.
However the youngest will be 3 so maybe childcare costs and your other half working part-time !
If you have no plans to move ? And family nearby to help with children then maybe consider 5 year deals !
What is the difference in Interest rates between 3 and 5 year deals

dimbo61 · 4 November 2018 at 10:41AM

Had a quick look on Nationwide website and I don't know your LTV but they have a 5 year fix at 2.19% with No fee.
Both kids would at school in 5 years and IF ? you have No plans to move you have security for the next 5 years.
Hopefully your LTV should be under 60% by then
I took out a 5 year deal back in 2005 at a mortgage rate of 4.74% but with 3 kids we needed the security at the time ! Overpaid every month to reduce the debt and become Mortgage Free as fast as we could afford to.
Your decision after consulting the Boss &#55357;&#56842;

darrenwis · 4 November 2018 at 12:28PM

Thanks for the replies.

We would possibly be looking to move in the next 5years as our house is certainly becoming crowded. But not sure if anything would happen with the next 3 years.

In terms of ours children, no family close so it
Would be school and childcare for the youngest which is why I was considering the 3 year fix.

LTV is 65% at present.

Fixing Mortgage - Which of these deals?

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