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General => General discussion => Topic started by: Diamond Hell on 31 July 2012, 19:49
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New mortgage deal. All are more than under 0.1% lower than the standard variable rate, so it needs to be fixed.
fix two years?
Fix three years, at an additional cost of £20 per month?
Fix five years at an additional cost of £30 per month?
The latter two give me the potential benefit that today's rates won't be around to fix at in two years time, so by fixing longer I will save at least as much over the term of the fix. Because the rates are so low at the moment I pay more to fix longer, because I'm insuring the risk that rates will go up over a longer term.
The alternative view is fix for two years because in two years time there will be another great two year deal so I save EVEN more over at least four years.
Come on then money whizzes. What would you do?
Please not there is not Andywash option. He doesn't have a mortgage as he owns outright and is destitute.
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Fix tow
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Depends on equity level at the moment. Will you be able to over pay a lot in a short time to fix at a slightly better deal in two years? Or maintain current payments and just happy to sit for the duration of the mortgage?
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oh i am dreading buying a house :shocked:
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if you follow the trend i.e. the way rates usually go after a recession. then defo fix for 5yrs :nerd:
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be carefull with long term mortgages if you think you might move home before its finished, a mate of mine tried moving house before his current mortgage expired and he had to pay a massive fee.
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Fix tow
i was gonna say that :grin:
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I am no expert but think that the safe bet is fixed for 5 years, but only if you can secure a decent rate. We fixed ours just before it all went poop and are pretty happy with it still. Not sure what deals are on at the moment but I am sure they are still out there.
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I went onto a variable rate when my deal came to an end. I figure I can always fix later if need be.
Have a look here..
http://www.thisismoney.co.uk/money/news/article-1607881/Interest-rates-News-predictions.html
Really depends on the figures involved, if its a large mortgage and you can comfortably afford the repayments then fix it for five years knowing that for this amount of time you have the security of knowing your monthly payment for a relatively small amount, £7.50 a week.
Or do what I did and gamble on rates staying low for the next few years, which is the general consensus anyway... You may have been offered a low rate fix, as if rate predictions are to be believed, they are gonna drop further still....
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Rumour on the financial markets suggests the bank of England base rate is going to drop to 0.25%! What is your lenders variable rate?
They also reckon it will be 2017 till the rates start increasing slightly! I have been on the Nationwides variable rate for nearly two yrs now since my deal ended. I pay 2% above the base rate.
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Five year fixed IMO. Should be beneficial over the period but every move is a gamble at the moment.
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I have just gone for a 3 year fixed mortgage, the difference in monthly repayments between 3 and 5 years was uneconomical for me.
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It's all down to attitude to risk and if you think the rates are going to go up or down really. We just started a 5 year fixed deal as the wife is likely to work less after she finishes maternity leave next year, so a two year deal would have seen us struggling to get a decent deal so we went 5 year so we could just forget about it. If you have some decent savings I'd also recomend an offset mortgage as your money will work for you better against the mortgage at the moment rather than the measly savings rate.
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If you are sure that you won't be moving then go for 5 years.
That's exactly what i have just done..
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Fix two.
rates could get better.
rates could get worse.
50/50
but with the fact of the 3 or 5 option, you will be losing £720 or £1800 just for the privelage.
but still the chance of the rates getting better, meaning you could miss out on saving yourself a rather nice sum.
please explain how its a 50/50 chance :rolleyes:
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recession.. its not a new thing.
not gospel but worth a read... I enjoyed spotting the similarities :laugh:
http://en.wikipedia.org/wiki/Early_1980s_recession
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You can lose money with fixed, but the point is security, interest rates can surge upwards at an alarming rate, it's happened before...
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I am having massive dramas at the moment, 5yr fixed is up, property has lost so much value that I need a 95% mortgage to fix again which is an issue because I am getting married and need to rent the house out and the need a 25% deposit..Sucks!
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Inflation rate is 2.4%, the lowest it has been for 2 years, down from a high of 5% at the end of 2011. With the BOE contemplating reducing the interest rate to 0.25%, it's worth considering fixing it for only 2 years.
Or if the reduction comes sooner, then go for a tracker. HSBC is doing a 2 year for 2.49% and the reverts to SVR after, which by that time may be very low.
With the economy and housing market in decline, together with low oil demand globally, I don't foresee the BOE raising the interest rate any time soon. There is plenty of spare capacity in the economy to cope with a sudden growth before generating any inflationary pressures.
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how do you know what the uk economy is going to do over the next 5 years.
This.
Exactly the reason to go for a longer fixed rate.
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how do you know what the uk economy is going to do over the next 5 years.
with rates at 0.5% how many times can they go down? how many times can they go up?
you cannot judge by whats happened in the past
Thats exactly what you can do with the past... what else is it useful for?
you cannot trust what the house of lords say as they lie, and decieve.
What does the house of lords have to do with this? :rolleyes:
sometimes its better to just keeep :lipsrsealed:
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sometimes its better to just keeep :lipsrsealed:
:grin:
I'm veering towards the five year fixed, on the basis that there's only likely to be at max a cut of 0.4% in the BOE base rate and things are more likely to go sh*t-shaped and interest rates head north in the 3-5 year range..... although that's nearly a reason to go 2 year fixed and review at that point.... but what if things are on the skids at that point and rates are rising already?
Could things change that fast, that badly?
(http://www.northloop.co.uk/forum/images/smilies/chin.gif)
how do you know what the uk economy is going to do over the next 5 years. you cannot judge by whats happened in the past. you cannot trust what the house of lords say as they lie, and decieve.
The only thing you'll see crystal ball gazing is a load of crystal balls as a mentor once sagely told me. History can teach us a lot though.... provided you're able to deliver some interpretation rather than just looking going 'yeah stuff happened, innit'.
I am curious about the comment about the House of Lords. It's like saying 'you cannot judge by whats happened in the past. you cannot trust the department of education.' Makes about as much sense in this context..... or does it? Can you enlighten us?
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Two year fix if you are confident in the market staying stagnent so you can pick up a better or equal fix in future.
3 year - is there really much value in this one?
5 year - comfort of knowing that even if rates exponentially increase that you'll be plumped on a reasonable rate for the duration.
Other option.... drop on a SVR then when the market looks like going north quickly jump on to a nice fixed rate.
This is of course assuming you will not be moving or buy to letting in the forseeable future.
Might be worth going shorted term and looking at making larger over payments (depending on how much you can pay back per month/year) which will obviously decrease the time and amount you pay quite substancially. :cool:
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Might be worth going shorted term and looking at making larger over payments (depending on how much you can pay back per month/year) which will obviously decrease the time and amount you pay quite substancially. :cool:
Totally get that, but I have two young kids and Mrs Hell isn't back into work proper yet - soon as we can over-pay we will.
Plus when we moved from Bristol (and sold there) we kept the new mortgage at the same term as we'd got to previously in Bristol so we started on 20 years. For me the time to over-pay is probably from about five years hence. Ooooh - long term planning: I feel SO grown up. :rolleyes:
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Sounds like a 5 year fix is a sure fire winner then? Given circumstances and over all plan to over pay.
I've just started my mortgage trip and fixed for 5 years for the exact reason that I know how much will be required each month so I can budget to that. However I can repay up to 20% of the monthly payment each month which if I stick to the plan I intend to start doing after the first 12months.
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5 years, unless the country suddenly goes bust I can't see rates getting much lower will possibly do a little lower but will not stay low for the next 5 years that is for sure !
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I would go 5 years if your staying in th house. I always to fixed rate mortgages so you nw where you are. What pees me off is when your existing lender charges you an arrangement fee for literally pushing the button on a new deal.
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Sounds like the security of 5 year is exactly what you need. Then overpay as said earlier (if possible)
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Another option we looked at was a 5 year deal, but it was a tracker for the first two years and then fixed for the remaining three. That way you have the gamble of keeping payments low for the 1st two years and if rates do rise sharpley (unlikely) you then only have a short term to battle through it and then have the security of a fixed rate deal for the last three years. Unfortunately, these only seem to make sense if you have a lower LTV other wise the fixed rates do seem to rise.
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not sure if this is an option but if it is then its certainly worth a look... fantastic way of being flexible and reducing the overall time period of the mortgage
http://www.banking-guide.org.uk/all-in-one-account.html
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If you look at the history of the economy things tend to have a pattern.
Do you own your own home?? :huh:
This thread is interestingn as im also looking at whats available. My thinking is to fix long term, especially as my young apprentice is en route and knowing my mortgage is going to be the same is appealing. Need to see whats out there and on offer
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Do you own your own home?? :huh:
This. If the answer is no, then please shut up.
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if you follow the trend i.e. the way rates usually go after a recession. then defo fix for 5yrs :nerd:
Yeah there set to go way up so i would do a 5 yr fixed.
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Why do you have to be a home owner to offer advice? I'm not a home owner but (like) to think I know what I'm talking about!
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if you follow the trend i.e. the way rates usually go after a recession. then defo fix for 5yrs :nerd:
that's assuming this recession will last at least three or four more years which is more than likely
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Why do you have to be a home owner to offer advice? I'm not a home owner but (like) to think I know what I'm talking about!
You know what you're talking about Tim :wink:
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And I am not a homeowner, yet :lipsrsealed:
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I just fixed for 2 years with NR this is best deal for my circumstances atm, got a loyalty discount and a drop in rate from std variable at around 4.2 down to 3.6
I am going to move in a couple of years and would have to pay nearly 4k to get out of a 5 year deal in that time frame.
its always a gamble :evil:
I only have 13 years left on my mortgage though, which takes me to 50...... :cool: sort of :grin:
HSBC are doing the best deals on 2/3/5 year mortgages, you need a good LTV on your property and possibly savings to qualify. Worth a visit to see if the computer says no :grin:
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I am going to move in a couple of years and would have to pay nearly 4k to get out of a 5 year deal in that time frame.
its always a gamble :evil:
You know that the rates are usually portable don't you ? So even if you move you will keep the same interest rate on what's left of your original balance. Unless of course you're moving abroad and selling up, in which case you would get stung.
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I am going to move in a couple of years and would have to pay nearly 4k to get out of a 5 year deal in that time frame.
its always a gamble :evil:
You know that the rates are usually portable don't you ? So even if you move you will keep the same interest rate on what's left of your original balance. Unless of course you're moving abroad and selling up, in which case you would get stung.
Taking the loan with you doesn't always work.
The bank will treat the addition amount as a separate loan, run along the current one.
And surprise surprise the addition loan is no where near as attractive, and the fees can be demanded up front, not added to the mortgage.
Be careful...
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I've ported mortgages across when I've moved a couple of times and had no problems what so ever. Maybe you need to stop going to those loan sharks. :grin:
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You know that the rates are usually portable don't you ? So even if you move you will keep the same interest rate on what's left of your original balance. Unless of course you're moving abroad and selling up, in which case you would get stung.
We tried porting ours across when we moved down here.
FAIL
'I'm afraid we've changed our lending terms and you no longer meet them, so if you want to move you would need to either find <a five figure sum> to bring your level of equity up to meet our requirements or find another provider.
We found another provider. Chelsea Building Society are no longer offering mortgages apparently, so probably best off out of that.
Now coming back to thinking about a 2 year fix, followed by a five year fix, for various reasons.
I'll never hear the end of it..... unless we can't get as good a deal in two years as we can at the moment.... in which case I'll just have to pay the extra, offset with the smug feeling of 'see I told you we should have gone for a five year fix' :rolleyes:
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imo never pay them anymore then you have to, so if the 2yr deal is free then thats what i go for, who the hell knows what happens in 2 yrs time?
they are banking on you paying an extra 30 a month to secure something you may never need, more money in their coffers, why not pay the extra 30 on your mortgage if it repayment?
just re-done mine and they kept trying to add in the 30000 endowment that finishes next month which would have cost me 700 in penalty fees for paying back before the fixed deal is finished, boy did they get short shrift.
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exactly the point i was trying to make. but people know for deffinate what the financial future holds. must have crystal balls or something.
You can't spell definite, I'm not terribly likely to listen to you.
Plus neither you nor raferackstraw seem to understand the financial pain that would be experienced if rates went up in two years time and I wasn't able to secure a deal as good as the five year fix I can get now.
How much further down are rates likely to go from where they are now?!
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Thom ,I reckon they will go down to 0.25% due to inflation rates. Its a gamble mate! You need to get independent financial advice on this subject!
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Thom ,I reckon they will go down to 0.25% due to inflation rates. Its a gamble mate! You need to get independent financial advice on this subject!
I know it's a gamble and I've got some pretty solid thoughts on it myself. The last thing I'm going to do is get some 'independent financial advice' from an 'IFA' because I don't trust secondhand money salesmen.
I would rather see the interesting things all manner of people have to say on the subject because it gives the widest variety of views and slants I might not have thought of, which is helpful. Interesting to see views on other forums as well. :cool:
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I fixed for 5 years, 4 years ago. About 3 months after doing it, thanks to the so called expert "mortgage advisor", interest rates dropped rapidly. He got his nice commission, and I got seen off! I'd go for two years personally. What does the extra percentage in rates translate to overall? Is your mortgage likely to rise by an extra £20 or £30 pcm if rates rise a little? I don't think they will over that period for you to see any benefit by taking them. I was on a tracker previously, and the range was only about £30 over the 5 years I had that. (Admittedly it was only a 75k mortgage at the time though). Its a gamble whatever you do, but do what you feel is right for you, and don't always take the "experts" advice as gospel.
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If rates go up by 0.4% on the deals on offer when I come to renew then I'll have covered any disadvantage of going longer.
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i dont know, cant see the future :grin:
if you are that sure they are going down
take a guess... in fact take 2. I bet you could still be wrong :lipsrsealed:
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exactly the point i was trying to make. but people know for deffinate what the financial future holds. must have crystal balls or something.
You can't spell definite, I'm not terribly likely to listen to you.
Plus neither you nor raferackstraw seem to understand the financial pain that would be experienced if rates went up in two years time and I wasn't able to secure a deal as good as the five year fix I can get now.
How much further down are rates likely to go from where they are now?!
blimey for someone who likes to think they are ahead of the game you are being rather stupid, go ahead give them extra money for something you do not need at this point in time
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go ahead give them extra money for something you do not need at this point in time
H'mmmm. I think that viewpoint is rather short-sighted. Although it's nice to be offered the choice of rates, why would you be being offered a significant discount on the two year mortgage? Might it be because that's the one they want you to go for? There are at least two sides to every story and the banks can tell the future as much as you and I. Why would they price the five year fix higher, if there was no benefit?
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god mate you have really swallowed the spiel, DO NOT give them any more money than you have to in this point in time. my circumstances are different, however understand that they are trying to get the best deal for themselves over your amount. why pay them that extra a month, when in 3yrs you may want to move and ergo have to pay penalty fees for closing early :huh:
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why pay them that extra a month, when in 3yrs you may want to move and ergo have to pay penalty fees for closing early
Because in two years the rates may go up above their current level, so for three of the five years I could end up paying 'them' more than I am now. You don't seem to be able to wrap your head around this 'pay slightly more now, possibly pay significantly less for 3/5 years' concept, do you?
I have two young kids who have just started school. It is very unlikely (although not impossible) that I will move because of the upheaval it would cause in the life of my kids. If you don't have kids, maybe you don't understand what a significant factor that is in considering this scenario?
Or maybe you live somewhere sh*t? I don't, so I'm not really interested in moving.
If I'm unlikely to move then securing the rate my mortgage is paid at for five years is of significant value because it is one less variable in my financial life.
Different products suit different people at different stages of their life. If you travel the route of 'always take the cheapest deal right now' then you may find you wind up paying more overall at various stages in your life.
Step away and have a think about what you're saying - there is no 'right' answer here until five years hence when all three scenarios can be played out. What there are, are different personal circumstances which will give different people different levels of predisposition for different products.
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wow you really do like attacking advice after you have asked for it? :huh: your circumstances are different from mine , in my experience a 2 yr deal has been what i have found is the best, always free and i have lived in this location on and off for 30+yrs so moving? no.
please dont slag off opinions or advice with mortgage experiences when we are trying to give you a difference of opinion.
at the end of the day you do what you think is best and stand by your decision.
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I think the real question here is can you afford to make the payments if the rates rise to the usual post-recession levels?
There is no given that they will.. but if they even went up to half what they did in the late 80's I think its worth considering.
imo 2 yr deals are for those like to get bent over on a regular basis... live for the moment types... you make your choices :cool:
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please dont slag off opinions or advice with mortgage experiences when we are trying to give you a difference of opinion.
Errr, it's called discussion - you put your argument forward very confidently and I've countered it. It's kinda what a discussion forum is about. It's not slagging, it's discussing.
I think the real question here is can you afford to make the payments if the rates rise to the usual post-recession levels?
There is no given that they will.. but if they even went up to half what they did in the late 80's I think its worth considering.
This is precisely my concern. What are the persuasive arguments that a two year deal is the right thing to do right now. 'it's always worked for me' isn't a strong argument.
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After reading your posts regarding your Wife working part time and security for your two daughters I would personally go for a 5 year fixed if I was in your shoes. The state the money markets are in at the moment I think going for long term security option is the wisest option IMO. I would be happy to pay a little bit more for peace of mind!
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those dirty barstewards tesco are bringing out some mortgage products next week.... sit tight :nerd:
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Out of interest (hehe) did you read the link I previously posted? It really is relevant to your original question....
http://www.thisismoney.co.uk/money/news/article-1607881/Interest-rates-News-predictions.html
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Without exact figures it’s hard to answer the orginal question, if you fix the rate you will pay for the privilege of doing so, if this saves you money then yes do it.In my humble opinion interest rates are not going to rise dramatically in the next five years, having said that in these crazy times another black Wednesday or similar would not surprise me. :undecided:
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Interest rates (as in mortgage rates) have already started to rise. Unless going for a tracker or variable rate mortgage, the BoE base rate doesn't really make any difference. I fixed my mortgage in January for 5 years and from starting my application to completeing it, the same building society had upped their rates, as have all the others. I can't get the deal now that I got then and that has changed in the just 8 months.
Personally, my wife's just given birth, I already have a 12 year old, so knowing the exact amount I have to pay for the next 5 years was the most important thing for us. Yes I could pay less on a variable rate if the rates go down but I could also pay more if they go up and that could really screw us over. Also, all being well, in 5 years time we will have a more favourable LTV, which means you're less of a risk, so they give you a better rate and cheaper payments, which is counter intuitive really, but that's the way it goes.
I started work for a building society when I was 17 and the interest rate then was 15.4% ! Man that would screw most people over these days. :shocked:
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Interest rates (as in mortgage rates) have already started to rise. Unless going for a tracker or variable rate mortgage, the BoE base rate doesn't really make any difference. I fixed my mortgage in January for 5 years and from starting my application to completeing it, the same building society had upped their rates, as have all the others. I can't get the deal now that I got then and that has changed in the just 8 months.
Personally, my wife's just given birth, I already have a 12 year old, so knowing the exact amount I have to pay for the next 5 years was the most important thing for us. Yes I could pay less on a variable rate if the rates go down but I could also pay more if they go up and that could really screw us over. Also, all being well, in 5 years time we will have a more favourable LTV, which means you're less of a risk, so they give you a better rate and cheaper payments, which is counter intuitive really, but that's the way it goes.
I started work for a building society when I was 17 and the interest rate then was 15.4% ! Man that would screw most people over these days. :shocked:
Good advice..
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What you need to work out is what you are happy paying each month and how much is it ultimately going to cost you.
You could get a 2 year fixed with no fees, and be laughing at the end of it if the rates are still the same, or have to sign up for a new product at a higher rate if things go the other way. Alternatively you could pay out more money over 5 years safe in the knowledge that you know what you are going to have to pay each month. No one realy knows what is going to happen, so you pays your money and all that.
Each time I have renewed, I have never taken too much notice of the rates. I have added up all the payments with or without fees and worked out which deal I ultimately pay less for. Also if you are able, reducing the length term will bring the day when the mortgage burden is finally over that little bit closer.
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So what (if any) did you go for?
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We've fixed for two years, after much reading up and lots of discussion at home.
If we can't get something around 4.19% for five years in two years then I am going to have a massive 'told you so' moment with Mrs Hell.
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you can ask for the pants back then too :laugh:
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What's your LTV if you don't mind me asking, feel free to PM.
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We have about 27% equity.
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We have about 27% equity.
a tad better than my 17% then :sad:
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We have about 27% equity.
a tad better than my 17% then :sad:
Stop spending money on the Golf then :tongue:
Need to start looking at mine ASAP so I can spend more on the Aldi :laugh: :laugh:
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a tad better than my 17% then :sad:
It's only as good as it is because next door and a couple of doors down sold for +£20k vs what we bought ours for three years ago! :cool: