john banks

Trying to decide between the above two options, first is variable at base rate+0.19% for term so 4.69% with no redemption penalties and overpayments can be borrowed back. Second is fixed at 4.99% over 5 years with 5,4,3,2,1% redemption penalty per year allowing 10% repayment per year without penalty (unable to borrow back) and is portable if we move within 5 years. There is a 4.89% 5 year fix but it is not portable.

Loan to value is 55%, loan is twice gross annual household income. We are generally risk averse and expect to make overpayments as with previous mortgage which cleared it in 7 years.

Of course no one can predict the rates, but any hints on how to decide in this situation? Any better deals anyone has found?

Suresh

UK inflation is fairly low and is expected to remain that way. A base rate rise in the shorter term is therefore unlikely. However, if you are risk adverse, then take the 5yr fixed and be sure about your future payments.

Dan J

Well there's noises being made of an increase in the base rate to 4.75% around August time. There's a meeting this Thursday too but I'm certain it won't move this time.

Why are you looking at a 5 yr fix? Any specific reason? Only you could get yourself a 2 yr fix with no tie ins on a lower rate than a 5 yr and then just review the situation again then.

john banks

Because we can't clear the mortgage in 2 years but almost could in 5 so that then rate changes would hardly matter, so then we're protected from an interest rate horror. If in 2 years time there is a high rate then we would not be able to get a good fixed deal then.

Petem95

I would go for the fixed, no doubt about it.

UK inflation has been rising, and is expected to rise further still - interest rates are also expected to start climbing later this year;

http://news.bbc.co.uk/1/hi/business/5046662.stm

Interest rates in the US have risen loads, and EU and even Japanese rates are on the up. UK rates are likely to go in the same direction. The rates you get on fixed rate savings are up - suggesting banks are pretty sure rates are on the up.

dharbige

Can I ask who these are with? Both are better than what I'm currently paying, so may look to switch, or at least re-negotiate.

john banks

Charcol (www.charcolonline.co.uk) special with Woolwich for the 4.69 variable. First Active for the 4.99 5 yr fix - rate after the fix is base + 1.1%, but Charcol special with RBS has similar terms except a higher rate after the fix. Direct Line do a 4.89 5yr fix, but it isn't portable. These last three all allow 10% overpayment of the outstanding balance per year.

Reffro

Try the Chelsea, I got a 5 yr fixed at 4.69%, chunky redemption though, but its my first house so not likely to be a problem, its portable and you can overpay, but not by lump sum, 10% on each monthly payment is allowed though.

stilover

I got a mortgage 3.5 years ago. Agreed a 5 year fixed at 4.something percent.
Yes, If I chosen a variable rate I would have paid less, but at least I know exactly how much money I have to spend for the full 5 years. November next year is when my fixed rate runs out, I'll then shop around and get another 5 year fixed for 20 years. As I plan to pay my mortgage off in the next 7 years (end of next 5 year fixed term) this suits my purpose better.

I always like to know how much things are costing me. So I can buy other thing knowing my mortgage payments won't suddenly rise

lightning101

I thought everyone on scoobynet had earnings of 150K plus, no mortgage and a string of supercars to choose from

john banks

We don't earn £150k even between us, never mind individually, but have lived frugally and paid off the mortgage on our first house, and now have a long distance to travel to work, so it is time to move up the property ladder a bit. Don't have a supercar either, but I might be able to hassle a few with a poor(er) man's alternative (c.400 BHP Evo)

Peanuts

iTrader: (15)

we are just getting out of a 5 year fix, we looked at the Woolwich who offered us a 10yr fix at 4.99% or with iirc scarborough BS who also offered a 10yr fix at 4.99.

I would take a fix everyday of the week because while I am quite risk tolerent, I have a deep seated fear of another 80's overnight rate hike.
A 10 year fix will see my mortgage til completion so Im willing to sign up for peace of mind on this one.

john banks

Thanks Reffro, Chelsea website says 5.39% 5 yr fixed with 5% redemption penalty any time in that 5 years. Did you get a better deal from them recently by some other means?

MikeCardiff

iTrader: (2)

Lloyds do a similar fixed rate as well - 4.99% for up to 7 years, plus you can overpay etc....

I think a long fixed term is a good safe bet as at least you know exactly what its going to cost you, plus you are safeguarded against any hikes in the interest rate - maybe they will drop a bit this year, but I cant see it being by much, and after that who knows ?

Even a small raise in the interest rate can add a fair whack to your monthly repayments if you have a larger mortgage, so its a big risk to take gambling that they wont go up in the next 5 or 7 years ( remember, nobody expected them to shoot up as high as they did in the last recession ! ).

john banks

They just told me they withdrew the 4.99 5yr last week - now it is 5.25%.

Peanuts

iTrader: (15)

you could always just buy the Times and go with who is offering the best rate/terms for you in their money section on that week John.

Reffro

Ouch, no special application, its the same 5yr deal they now quote at 5.39%. I applied in Feb and completed at the start of last month, so I guess the banks think that rates are going up in the short term.........

john banks

Thanks. Peanuts, I've been through the best buy tables to find what I have, but occasionally someone comes up with something better. Main point of the thread was to decide whether to fix, that has been the gut feeling all along, and I think it still is so I'll go with that.

Peanuts

iTrader: (15)

with only 5 years on the mortgage, I would fix and be done with it.
Better the devil you know so to speak

Spoon

101, can you help please?

Is a mortgage something I would buy for my Zonda or is it in the engine bay of my Murcielago?

lightning101

I doubt you need to worry your pretty little head about such trivial matters. Mortgages are for those funny little people in modeos and vectras that you laugh at out of your bedroom window at 7 in the morning, when you get up for a pee.

Spoon

I have no neighbours and don't wake until 9am, then I pee in a bottle.

lightning101

It's a different world, you live a life some can only dream of

Peanuts

iTrader: (15)

card board box on the south bank?
the bottle wouldnt be in a brown paper bag would it?

john banks

Northern Rock will do 5, 7, 10 or 15 years fixed at 5.19% with portability. 5, 4 or 3% penalty during the fixed period depending on the offer. The attraction is the ability to overpay with no limits and then borrow it back subject to £500 minimum.

Peanuts

iTrader: (15)

Lender rate term combined APR max LTV tie in?

Kent Reliance BS 4.78% 10 years 6.5% 75% No Overhang

Nationwide BS 5.08% 10 years 5.89% 90% No Overhang

First Active 4.69% To Jul 2008 5.6% 95% No Overhang

Direct Line 4.89% To Jun 2011 6% 95% No Overhang

Britannia BS 4.99% 5 years 6.1% 95% No Overhang

Portman BS 4.59% To Jun 2008 6.5% 95% No Overhang

taken from: http://www.yourmortgage.co.uk/espot/...upermarket.htm

john banks

Kent Reliance are England and Wales only unfortunately.

Peanuts

iTrader: (15)

that is an unbelievable rate though

john banks

It is indeed, I thought it would be worth the inflexibility for that.

Suresh

We fixed last November at 1.65% for ten years. Our simple internet savings account returns 3%.