Reply With QuoteTie ins? Redemption penalties?
Hi, my mortgage is due for renewal right now, I can't see rates getting much lower so I'm thinking I should fix now for as long as I can. Any downsides to doing so that anyone can think off?
Thanks, Rob.
Tie ins? Redemption penalties?
I think it can get to 0.Originally Posted by jammie*dodger
yes, thats been a consideration last time as the rate was higher than the base rate. This time I'm not sure it will get much lower and if it did it would only likely cost me a tenner or so a month.
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even if it did would that make a huge difference? 0.1 down to 0 ?
If you need flexibility for whatever reason, for example impending windfall, then opt for something without tie ins. If you want security of knowing your payments for a period of time, then go for fixed. FWIW I wouldn’t be looking to fix if it was short term, say 2 years right now. If I was going to fix I’d want 5 years. Also even if rates drop more, doesn’t mean lenders will follow suit unless it’s linked to the BBR.
Thanks, I have the offer of 5 year fixed for almost the same price as a 3 year deal. Im speaking to a mortgage adviser later but I suspect he wont have much more of value to add.
Look at the total cost over the term including fees and charges. The shorter term deals mean fees more often and that pushes up the effective rate and cost to you.
Rates are about as low as than can possibly get accounting for lenders built in costs..
Get all the quotes together an individual advisor will have access to the whole market do an overall costing taking into account fees and any flexibility you may need in the future..
My Son had a flexible rate with the Halifax some years back that was linked to a percentage under the base rate and they were paying him each month for nearly 3 years.. but I would think those offers are long behind us..
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5 year fixed is probably the way to go. It's not going to get much lower than the current rate as banks would have their own interest as well on top of the base rate.
I did my remortgage last year and was already happy with the rate I got back then hah
Just had a quick look at rates for me on the back of this thread
2 yr fix 1.69%
3 yr fix 1.69%
5 yr fix 1.69%
2 yr variable, base +1.59% = 1.69%
Erm, 5yr fix please
I’ve just fixed for 5 years back in Feb. I like having the certainty.
5year fix I've just done. Cant see it going any lower
I've always gone for 5yr fixed myself. Can't imagine you will get a better deal than this moving forward tbh.
I had a 5 year fixed and when my circumstances changed (separation) I needed to redeem and got stung for the equivalent of a day date in fees
OP, I recently went for a 5yr fixed based on the same thinking.
It’s whatever suits you and your circumstances though.
Timely thread as my remortgage is due soon.
On the 5-year fixed option, which does seem the logical route...if you were to move house I guess it restricts you somewhat? As in you must stick with same lender, do a new application, get a valuation, etc. In the past I have always gone variable so I have total freedom if moving house.
Only other thing I am thinking about, if you do a 5-year fix and then want to remortgage your current home in 2 years time to get more cash (for an extension for example), I guess you would just top up / add-on, but again you would be restricted to applying through same lender (unless wanting to pay the exit fee).
Well mortgage advisor failed to call at the agreed time.
The 5 year deal looks quite good and will save us a decent amount evert month as well as providing the security of knowing how much I'm paying so I think we'll be going for that.
Thanks for everyones input, its good to see so many other people looking at the same sort of deal.
Depends on how long is left as well - when I got towards the end of my mortgage, it was not worth refixing because I could not see interest rates rising quicker than I could pay it off..
I'm no finanicial expert but a few of my friends are into lots of investment and financial stuff.
I would always say to lock in to a number you can afford might not the outright cheapest but is always a sensible option.
I went in to a 5 year deal because I'm risk averse but wish I hadn't now cos I have funds in the bank earning sod all interest, but the penalties on the mortgage make it pointless overpaying beyond the free allowance. It's annoying but no one saw this coming.
Times like these do make me want to become debt free ASAP though can't explain why.
I think as you do. 2 years a go I went for a 5 year fix (best at the time was 2%) as I'm also risk averse and I like to know that I can afford the payments. I'm still smarting from the 1980's when the interest rate kept climbing and I think I was paying over 14% (may have been more but I can't recall) and struggled to pay it! I'm fortunate to have some savings and I too could now probably clear mine but the penalties are too big that it doesn't make sense so I'll plod on with it.
Now they are so low I would definitely fix unless you think you will want to pay a big chunk (ie: more than the permitted overpayment amount per year) within the the fixed time frame of your new mortgage period.
Our fixed rate is expiring soon too. The rates don’t seem as competitive as they were 3 years ago when we last remortgaged. We got a 3 year fix with offset facility at 1.44%, and 2 year fixed were under 1%.
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What is the 5 year interest rate you are being offered?
I fixed at 1.99% for 5 years back in 2017. Like others have said, keeping payments at a known level helps with planning and cashflow.
I went for a variable rate, fixed at a little over 1% over base for 2 years. Luckily since I fixed the rate the base rate has been lowered twice.
I have high hopes, although that’s all they might be, of clearing the full mortgage within the next two years so went for the slightly cheaper option. Plus with the version I have gone fir there is no penalty for early repayments, and I can pay off as much as I like in any year without any additional penalties.
Im hoping rates remain low for a little while, or at least until I’m mortgage free again lol
It's just a matter of time...
I fixed for 5 years last year I like to know how much I’m paying every month
Also interested in this thread as I have a 5 year fix ending later this year. I thought that in 2015 rates would only really go up or stay static but was clearly wrong on that score! The security of payments etc was also a factor.
It is likely I will be looking at moving in around 2-3 years so would be reluctant to fix for longer than 2 years this time. The issue with a fixed rate is that I would likely be able to pay off a good chunk of the mortgage during that time and with a fix, would be limited to 10% of the value. Am considering a tracker as then if rates do rise a lot, I should be able to pay off chunks even if I don't do that at the outset.
With uncertain economical perspective ahead (Brexit, corona-related) I would always opt for something that you afford in the future.
Overhere, 30 yrs fixed can be found as low as 1,79% and with the Dutch income tax system in favour of home-owners, the netto amount one has to pay every month is even lower; 37 - 50% less than de listed interest. Having said that, I'm glad we're done paying a mortgage. Every brick and nail of the house is ours.
Menno
We are just in the process of moving and have got a rate fixed with NatWest. Rate is 1.24% which is decent enough. I think you had to put a minimum of 30% deposit down however I think that is driven by the current climate more than anything else.
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I just go with the prevailing cheapest rate ..... don’t believe interest rates will climb for several years. They are talking negative rates on deposits .....
For me the bigger saving is made by having an offset. So rainy day money and money put aside for tax etc which would earn nothing is making an impact on the length of loan. It also gives you the flexibility of overpaying without any penalties.
Probably the most effective thing an IFA got me To do in 2007. I won’t mention the other crap the same said IFA got me into !!!
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Who does offset mortgages these days?
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Mine is called a cashpool with Handelsbanken
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Ah yes, did explore using them some years back but their rates were not great at the time. May give it a go this time, thank you.
First Direct have a pretty good option: 1.49% for 5 years fixed (60% LTV, £490 fees). The rate itself is matched by others but what they do is allow pretty close to unlimited over-payments which is unusual for any fixed rate.
I did all the paperwork early this year to move from my current tracker but as the BoE rates have fallen so much, my tracker is a lot cheaper so I'm staying with that for now.
I moved to this very easy process
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