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  • FIRST POST
    • Mr Munneepennee
    • By Mr Munneepennee 16th Apr 19, 10:38 AM
    • 17Posts
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    Mr Munneepennee
    What would you do?
    • #1
    • 16th Apr 19, 10:38 AM
    What would you do? 16th Apr 19 at 10:38 AM
    Just got my full mortgage offer through

    At the start of the process I opted for a 2 year fix at 2.34%

    However the 5 year fix appeals to me in that I don't need to worry about rates over the next few years. It is also very unlikely that I would want to move house in the next 5 years.

    The only issue with the 5 year fix is that it's at 3.04% or an extra 60 per month. That's what's holding me back from changing.

    What would you do and why?
Page 1
    • beany_bot
    • By beany_bot 16th Apr 19, 10:46 AM
    • 343 Posts
    • 138 Thanks
    beany_bot
    • #2
    • 16th Apr 19, 10:46 AM
    • #2
    • 16th Apr 19, 10:46 AM
    It's always a gamble. And as such the bank stacks the odds in their favour.

    Personally I don't see intrest rates going up much any time soon. I would take the 2 year offer.
    I have been doing this for decades now and have probably saved 1000's of pounds over if I had taken 5 year deals. So even if I slip up this time I will still be "up".
    • zx81
    • By zx81 16th Apr 19, 10:57 AM
    • 21,678 Posts
    • 23,572 Thanks
    zx81
    • #3
    • 16th Apr 19, 10:57 AM
    • #3
    • 16th Apr 19, 10:57 AM
    What would you do and why?
    Originally posted by Mr Munneepennee
    I'd decide whether I wanted guaranteed payments or lower payments.

    It's about your mindset and risk appetite, which others can't answer for you.
    • ACG
    • By ACG 16th Apr 19, 11:47 AM
    • 18,720 Posts
    • 10,327 Thanks
    ACG
    • #4
    • 16th Apr 19, 11:47 AM
    • #4
    • 16th Apr 19, 11:47 AM
    Are you at 85-90% LTV?
    That seems a little on the high side.

    Have you shopped around?
    If you are at a high LTV, you are paying for that security. You are also potentially not going to be able to take advantage of any improvements in reduced LTVs if your property increases in value.
    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.
    • Mr Munneepennee
    • By Mr Munneepennee 16th Apr 19, 12:04 PM
    • 17 Posts
    • 3 Thanks
    Mr Munneepennee
    • #5
    • 16th Apr 19, 12:04 PM
    • #5
    • 16th Apr 19, 12:04 PM
    Thanks for the replies so far.

    I'm 90% Ltv and this lender was the only option due to a complex employment situation. 2 brokers failed then i finally found one who managed to get me this so shopping around really isn't an option.
    • ACG
    • By ACG 16th Apr 19, 1:48 PM
    • 18,720 Posts
    • 10,327 Thanks
    ACG
    • #6
    • 16th Apr 19, 1:48 PM
    • #6
    • 16th Apr 19, 1:48 PM
    Fair enough.

    This is me speaking personally rather than professionally as I am basing it on little information.

    I think I would be more inclined to look at a 2-3 year fix and hope that in 2-3 years I can take advantage of 85% LTV products. Rates may go up in 2-3 years, house prices may drop.

    If you were to tie in for the 2 year fix, you are hoping to get something better than around 3.3% at the end of the deal. I think the chances of that happening are more likely than not, so on that basis I would go for the shorter fix.
    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.
    • AnotherJoe
    • By AnotherJoe 16th Apr 19, 3:06 PM
    • 13,409 Posts
    • 15,829 Thanks
    AnotherJoe
    • #7
    • 16th Apr 19, 3:06 PM
    • #7
    • 16th Apr 19, 3:06 PM
    I'd stay with the 2 year and then probably a 3 year next time round.

    In the meantime do something with that 60 - pension, ISA, overpay, high interest regular saver, whatever.
    • Mr Munneepennee
    • By Mr Munneepennee 16th Apr 19, 3:13 PM
    • 17 Posts
    • 3 Thanks
    Mr Munneepennee
    • #8
    • 16th Apr 19, 3:13 PM
    • #8
    • 16th Apr 19, 3:13 PM
    Unanimous then. Exactly the sort of sensible replies I was after. Thank you.
    • Thrugelmir
    • By Thrugelmir 16th Apr 19, 3:50 PM
    • 62,850 Posts
    • 55,821 Thanks
    Thrugelmir
    • #9
    • 16th Apr 19, 3:50 PM
    • #9
    • 16th Apr 19, 3:50 PM

    The only issue with the 5 year fix is that it's at 3.04% or an extra 60 per month. That's what's holding me back from changing.

    What would you do and why?
    Originally posted by Mr Munneepennee
    What if mortgage interest rates were to rise in the next two years?

    Down to personal choice. Interest rates are going to rise in the future. Just a question of when.
    "The most dangerous thing is to buy something at the peak of its popularity. At that point, all favourable facts and opinions are already factored into its price and no new buyers are left to emerge." - Howard Marks
    • enthusiasticsaver
    • By enthusiasticsaver 16th Apr 19, 5:03 PM
    • 8,361 Posts
    • 19,114 Thanks
    enthusiasticsaver
    I think it would depend on several things but I would lean towards taking the cheaper 2 year fix too. One reason which has already been mentioned is if you are at 90% LTV now in 2 years time you may well have dropped a threshold to a lower LTV and get an even better rate. Another is I do not see rates increasing any time soon so saving yourself a minimum of 1440 over the 2 years seems sensible. Of course the downside to this is that you take a gamble rates will not increase and if they do then the rate you get in 2 years time may be worse. If you are very close to the wire you may want the certainty of knowing where you are for the next 5 years if this is the case. Of course you need to be certain you won't want to sell up and move if this is the option you go for.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
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