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  • FIRST POST
    • FIRSTTIMER
    • By FIRSTTIMER 15th Apr 18, 5:31 PM
    • 359Posts
    • 61Thanks
    FIRSTTIMER
    Is it worth cycling a two year fix at 80% LTV
    • #1
    • 15th Apr 18, 5:31 PM
    Is it worth cycling a two year fix at 80% LTV 15th Apr 18 at 5:31 PM
    Hi,


    I am wondering whether to continue to keep doing two year fixes with my mortgage given rate rises or take out a 5yr plan.


    I will no doubt dropt LTV every two years at 5% (currently 80%) thus get a better rate then fix maybe for long term. I don't want to fix for five years at 80% LTV then miss out on say 65-70% LTV maybe at year 4/5 of the fix due to price rises and overpayments.....thoughts? What is the best option? #crystalball


    Only a small mtg circa 140k ish
Page 1
    • ACG
    • By ACG 15th Apr 18, 6:08 PM
    • 17,320 Posts
    • 9,180 Thanks
    ACG
    • #2
    • 15th Apr 18, 6:08 PM
    • #2
    • 15th Apr 18, 6:08 PM
    5 year fixed rates are quite competitive at the minute compared to 2 year fixes. So you may miss out on LTV reductions, but it may still end up being better in the long term.

    I sent a customer 3 figures on friday - lower LTV than yours but this just shows the difference:
    2 year fix - 1.99% - 590
    3 year fix - 2.04% - 592
    5 year fix - 2.14% - 598

    So for the sake of 96 a year for the first 2 years, they are protected against rate rises.

    As it happens they opted for a 3 year fix as they plan on moving in 4-5 years so they would prefer to not be tied in when the time comes. But it is really just a case of doing the sums and seeing which works for you.
    I am a Mortgage Adviser
    You 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.
    • getmore4less
    • By getmore4less 15th Apr 18, 6:10 PM
    • 32,686 Posts
    • 19,670 Thanks
    getmore4less
    • #3
    • 15th Apr 18, 6:10 PM
    • #3
    • 15th Apr 18, 6:10 PM
    You need to look at the predicted reduction in rates due to improving LTV

    you can then crunch the numbers for 2 year options against a 5 year and see what rate rises will make you worse off.


    different lenders have different sweet spots where the next reduction for LYV is small/zero
    Last edited by getmore4less; 15-04-2018 at 6:13 PM.
    • Thrugelmir
    • By Thrugelmir 15th Apr 18, 6:16 PM
    • 59,500 Posts
    • 52,807 Thanks
    Thrugelmir
    • #4
    • 15th Apr 18, 6:16 PM
    • #4
    • 15th Apr 18, 6:16 PM
    Only a small mtg circa 140k ish
    Originally posted by FIRSTTIMER
    Large enough to be impacted by rising interest rates.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • getmore4less
    • By getmore4less 15th Apr 18, 7:24 PM
    • 32,686 Posts
    • 19,670 Thanks
    getmore4less
    • #5
    • 15th Apr 18, 7:24 PM
    • #5
    • 15th Apr 18, 7:24 PM
    Don't forget a lower rate pays the debt off faster even though the payment is lower.
    • FIRSTTIMER
    • By FIRSTTIMER 15th Apr 18, 9:29 PM
    • 359 Posts
    • 61 Thanks
    FIRSTTIMER
    • #6
    • 15th Apr 18, 9:29 PM
    • #6
    • 15th Apr 18, 9:29 PM
    Interesting - thanks for all this advice. I am looking at fixing with possibly 3/4 years max. I also may want to move/transition to buy to let in the future on this house.
    HSBC and Tesco 3 yr deals look good for me.
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