Mortgage advice needed

[lost in london]

Just had an offer accepted on a house and need to make my mind up about which mortgage to go for - do i fix it or do I chance my arm and go for a tracker? Have done well out of a tracker the last few years, but this move is stretching me, initial payments would be cheaper on a tracker, but I would be in a bit of bother if I ended up paying much more than what I can get on a fixed.

Any thoughts?

ps what is a discounted mortgage?

 

[the slow norris]

, but I would be in a bit of bother if I ended up paying much more than what I can get on a fixed.

given this statement, I would go on a fixed rate. If you went on a tracker you would potentially be entering into a bet that you cant afford not to come in.

 

[seagullsovergrimsby]

my advice is to PM Hiney or Uncle Spielberg for expert recommendations.

 

[Springal]

Go fixed, the only way mortgages will go, is up, so if you have any doubt that if interest rate doubled or tripled you won't be able to afford the payments go fixed.

I played the tracker game and was lucky as rates were high and went to where they were now, but went fixed 12 months ago

 

[mcshane in the 79th]

If there's a fixed mortgage with monthly payments you can afford, then go for it. Yeah you may lose out a bit but nowhere near as much as you could should things go pearshaped. I'm no expert though!

 

[Papak]

Be quick and get yourself over to Smile and go for their 10 year fix @ 5.59%. It is actually fixed until 31/05/2021.

I did it last night and I don't think it will be around for much longer.

I don't think they work with IFA / brokers etc. so it might not get recommended to you by these professionals.


Good Luck!!

 

[Hiney]

As Springal says, any rate changes from now on will be up. If affordability is tight then it will only get worse if rates start to rise. It therefore makes sense to fix, obviously.

The rates available will depend on the 'loan to value' of the transaction. The higher proportion of the purchase price you are borrowing, the bigger risk it is for the lender, and the higher the rate will be, to reflect that risk.

Another way to reduce the cost in the short term, is to take a portion of the loan on an 'interest-only' basis. This approach is not without it's downsides though.

PM me if you want any more info.

 

[Westdene Seagull]

I'm currently on a fixed rate that I took out just before the dive in interest rates

I'm currently on 6.49% which is up in August - what type of interest rate would I currently be looking at for a LTV around 85% ?

 

[lost in london]

All interesting, and where I'm leaning. Thanks all.

A broker has just told me he will talk to my current lender as they might be willing to port my mortgage - given that it's 1.39% above base I had ruled that one out thinking they would be glad to be rid of me.

If that doesn't happen, will fix it. Done.

 

[Triggaaar]

Go fixed, the only way mortgages will go, is up, so if you have any doubt that if interest rate doubled or tripled you won't be able to afford the payments go fixed.

This would be fine, except most fixed rates only last a couple of years. So you'll pay more now than if you got a tracker, and as rates go up slowly you'll continue to pay more, until you're paying about the same or slightly less when suddenly your fixed rate ends and was an expensive waste of time.

Be quick and get yourself over to Smile and go for their 10 year fix @ 5.59%. It is actually fixed until 31/05/2021.

That's a long term deal and does guarantee you a safety net. A 5 year deal would also be about long enough, but 2 or 3 years will be pointless.

Just think, if rates go up so much that you couldn't afford a tracker, the first thing that will happen is house prices will fall - a lot, because others won't be able to afford their tracker either. The second thing that will happen is your fixed rate will end, and you won't be able to afford the standard variable rate you're forced onto, and you won't be able to sell because everyone else will be in the same position.

If the rate for 5 or 10 year deal isn't good enough for you, you might as well for for a tracker.

 

[Westdene Seagull]

This would be fine, except most fixed rates only last a couple of years. So you'll pay more now than if you got a tracker, and as rates go up slowly you'll continue to pay more, until you're paying about the same or slightly less when suddenly your fixed rate ends and was an expensive waste of time.

That's a long term deal and does guarantee you a safety net. A 5 year deal would also be about long enough, but 2 or 3 years will be pointless.

Just think, if rates go up so much that you couldn't afford a tracker, the first thing that will happen is house prices will fall - a lot, because others won't be able to afford their tracker either. The second thing that will happen is your fixed rate will end, and you won't be able to afford the standard variable rate you're forced onto, and you won't be able to sell because everyone else will be in the same position.

If the rate for 5 or 10 year deal isn't good enough for you, you might as well for for a tracker.

Christ - thank god you're not a IFA !!!! There's so much wrong with that post I don't know where to start.

 

[Triggaaar]

A broker has just told me he will talk to my current lender as they might be willing to port my mortgage - given that it's 1.39% above base I had ruled that one out thinking they would be glad to be rid of me.

That's what I'd do, they shouldn't be able to stop you, just because they don't like the rate. When you took it out, there'd have been clauses about porting it. That's about 4 1/2 % less than the 10 year fixed - stick the difference in a savings account to help if rates ever take you past 5.59

 

[Triggaaar]

There's so much wrong with that post I don't know where to start.

Start from the beginning, let's hear what you think. It works for me.

 

[beorhthelm]

A broker has just told me he will talk to my current lender as they might be willing to port my mortgage - given that it's 1.39% above base I had ruled that one out thinking they would be glad to be rid of me.

have you thought of talking to them yourself...? i found Nationwide very helpfull and they happily ported existing mrtgage across as a matter of normal procedure.

couple of things to consider, which i went over when i moved last year. how far above the a tracker is the fixed you might get? if its 2, 3% more then thats quite alot of rate rises to go before you see the benefit, if its fixed for say 2 years, you probably wont. if you budget for that higher rate and keep the difference you can pay off excess or save it to pay if/when the rate goes higher, but if you have the higher fixed from day one, thats what you are paying. If you can fix for a long time, 10years +, its probably best, if its 2yr its proably not worth it as you'll be back on the tracker just as the rates are going up anyway. Watch the fees VERY carefully. be careful that the amount of the fee is not more than the saving on the mortgage product. you'll see things offering say 0.4% less if you pay £1000 fee rather than normal £500. but crunch the numbers and you realise you pay save less that £500 at that rate over the term - you are paying more for the lower rate.

 

[Triggaaar]

how far above the a tracker is the fixed you might get? if its 2, 3% more then thats quite alot of rate rises to go before you see the benefit, if its fixed for say 2 years, you probably wont. if you budget for that higher rate and keep the difference you can pay off excess or save it to pay if/when the rate goes higher.
...
If you can fix for a long time, 10years +, its probably best, if its 2yr its proably not worth it as you'll be back on the tracker just as the rates are going up anyway.

Exactly what I think, although presumably Westdene completely disagrees. Can you explain why you disagree?

 

[Hiney]

All interesting, and where I'm leaning. Thanks all.

A broker has just told me he will talk to my current lender as they might be willing to port my mortgage - given that it's 1.39% above base I had ruled that one out thinking they would be glad to be rid of me.

If that doesn't happen, will fix it. Done.

The ability to port a mortgage is usually contained in the terms and conditions attached to your original offer.

You may have to go through a complete new application process though. At least one High Street lender will only let you port if you do this.

 

[Uncle Spielberg]

PM me.

 

[Uncle Spielberg]

Only just had an opportunity to comment. 10 year fixed ar 5.59% is a good rate BUT is it portable, what are the early redemption penalties ?. Long fixed rates often have massive erp's and are inflexible because of this if your circumstances change and for whatever reason you pay the mortgage off within 10 years. What is the loan to value ?. At 85% you would be looking at a new rate of around 5%. PM me for details. Don't disregard trackers as 2 year deals are around 0.75%-1% below the comparable fixed rates. I cannot give specific advise without a full fact find this is generic. If you can port the rate at the rate you are on that makes sense. When does the tracker rate end ?. Any additional borrowing would be on a new rate with the lender which will be higher.

 

[BigGully]

Non of us has the answer here .... trust me no-one ..... I backed a winner a few years ago and my wonderfully qualified Financial Advisor backed a pig and lost out big time.

Personally I cannot fathom how interest would rise any-time soon, demand seems to remain flat and the inflationary pressures are unlikely to be effected by an rate rise.

But of course at some stage, when demand returns interest rates will rise, thats what they are telling us, isn't it.

I have always locked into trackers but never beyond 3 years, usually 2 years.

Your own particular circumstances can change as does the economy, things we can never prepare for just happen.

So my wholly unqualified advice would be, if your worried try and get a decent fixed 2 year deal, if your not then relax, rates might rise but aint going to take off anytime soon.

But then again, I havent got a clue and nor does anyone else.

 

[Gordon Bennett]

I was in the Nationwide today to talk to them about my ISA. The guy said that their interest rates went up with morning which he reckoned was a sign that they expect interest rates generally to start rising quite soon.