Hi
With perfect timing, my beautifully low mortgage rate has come to an end…. Bad timing, but heh ho!
So, I’ve been offered a deal at 3.49% to fix for 7 years…. It’s easily affordable, but I’m anxious that it’s quite a long fix…. I’m well over the 60% LTV threshold
Shorter term fixes are nearer 4.49% (2years)
Predictions seem to be be that the BOE rate will peak end of ‘23 and then will ease off…. How quickly ans by how much remains to be seen…
Im pretty confident that 3.49% will feel like a reasonable deal within the next 24 months, but equally I could be kicking myself in the longer term…
I know that nobody on here is nostra damus…. But, what decisions are you making and why?
You have to look at it from a personal risk and affordability point of view. Not anybody else’s.
If you would struggle if rates went to 6% or more, maybe lock in now as nobody can predict the future.
On the other hand if rates went to 6% or more and you could comfortably cover that, then you may wish to take a gamble and fix for a shorter term in the hope that rates come down, but in the knowledge you are still comfortable if rates go up.
Over the historical long term, 3.49% is still low.
There are a few 5 year fixed deals close to 3.49% which i would take but at 7 years i would be looking for something else.
What NoTa said...historical average's near 7 percent...The BOE themselves now 'forecast' inflation'll maybe return close to their target in 2 years time...hmmm...I'd play it safe personally, take the 7 year option, and forget about it...less'n there's a better 7 year rate to be had.
Yeah…. We could manage even a hefty jump as we based our mortgage position (recent house move) on one salary only…. I’d just not like to pay over the odds in the future and curtail ‘fun money’Originally Posted by noTAGlove
3.49% is historically low…. In a modern context it feels high
I remember being amazed and delighted at getting a 5% deal not that long ago!
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You’d opt for 5?
We are looking at our mortgage next month as well. I reckon interest rates are only going one way at the Moment
Yep…. That’s my instinct
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You’re not wrong!!! I’d hate to be fixing in 12 months…. Would’ve loved to have fixed 12 months ago!
Yeah I agree.
Hindsight is a wonderful thing, but you could have, and anyone can still nix and fix, i.e. take the penalty for switching early on their existing mortgage, to a mortgage with much lower rates.
You’re not wrong!!! I’d hate to be fixing in 12 months…. Would’ve loved to have fixed 12 months ago![/QUOTE]
Just prefer 5 years myself and yes i fixed in January at 1.19%
Just like they told us inflation would be transitory. The just forgot to clarify years rather than months.
The cure for high inflation is high inflation. Yep, tell that to Turkey.
We are at record unemployment and Brexit workers have gone home. BoE printed on a colossal scale.
BoE in the process of forcing a recession to combat inflation, and there only real tool is interest rates.
My expectation is for much higher rates. Hey, but what do I know
In the last 6 weeks U.K. 5 and 7 year gilts are up 1.5 percentage points from around 1.6% to over 3.1%. In just 6 weeks!
Given mortgages are priced off this and the banks have to make a profit, 3.49% will turn into 4% pretty soon.
https://www.marketwatch.com/investin...countryCode=BX
We fixed for 5 years not too long ago and luckily got in before the recent 0.25 and 0.5 percent increases. Managed 2.68%. I wouldn’t fix for less than 5 years at the moment.
Unless you need to take out money for work on your home or an extension I would go with the longest period at the longest rate.
I don't see a benefit in going 5 years when 7 is the same price. I'd go 7.
A few of our mortgage advisers went to a mortgage seminar this week and the general consensus from lenders is that most people are opting for 2 year fixed rates as the forecasts are that it will peak and start coming down around then. That may well be true, however They weren’t forecasting where we are today last year, so reality is things change.
Therefore you almost have to look at the rate as secondary and your primary consideration should be the term of the fix - what suits you and your circumstances. Short term rates give you far more flexibility and options, yet there’s the risk of higher rates at the end of it (or lower). Long term rates give you peace of mind and stability, yet you could substantially overpay for that privilege in either monthly payments (if rates drop) or redemption penalties if you have to sell.
There’s a lot of things to consider. If you have a mortgage adviser, it may well be worth chatting to them. Depending on the lender they may well be able to do the product transfer for you and get paid on it and if they don’t charge you a fee, it’s cost you nothing and they may help advise you on what’s most suitable for you as they will know your financial position.
I'm in exactly the same position as you I've been offered 3.54 over 2,3,5 or 7yrs by my lender, with no affordability checks etc.
Given that I went self employed just over a year ago, this could be a easy way for me to fix without any hassle. I'm a little torn between 5 & 7years and so am reading the coments on this with interest.
Personally, I don't think that interest rates will climb a lot higher, but there will still be some increases to come. More importantly, I don't see lenders offering great deals for quite some time to come
John
I'd look at the cost per month, personally.
If 3.47% is comfortably affordable and likely to remain that way, why not go with 7 years?
Yes it may be a little cheaper in 3 or 5 years, but it may be more expensive AND you've got the added hassle of remortgaging (and proving that the 50p you found down the back of the sofa isn't actually the result of running a drugs empire!).
We've got a mortgage (1.25% fixed for 5 years, rising to 2.5% for another 3). which looks great value at the moment, but I took it on the basis of monthly repayment affordability. I can (and always will be able to) afford the repayments with no problem, so I didn't wonder if maybe I could get a .2% drop in 2 years time.
M
Breitling Cosmonaute 809 - What's not to like?
I think you know a bit from memory?
It’s how long this cycle will work for…. I don’t think we’ve seen the end of the Brexit impact…. European immigration has been nett positive for the U.K. economy for many years…. It’s only a hunch, but I think this downward trend could take a little while to work out…
Yep…. I’ve already applied for the 3.49% fix as one thing I am certain of is that it’ll turn to four sharpish… I am not committed until December though…
Yep…. Understand the logic…. We moved 18 months ago and the loft conversion, large extension and renovation is complete…. I’d like some new front windows at some point but don’t need a mortgage extension to sort that…
We can easily afford the mortgage…. It equates to ~1/4 of our monthly income…. We like holidays and enjoying our time on this planet too! Anything above bills, savings and mortgage is fun money…. And I like to optimise how much fun I can have !!!
Well done to you and the earlier poster on your fixes….!
Last edited by Wolfie; 17th September 2022 at 13:02.
Yes…. I was hoping for a post from you…! Thank you!
I am dealing with a long term FA who I use…. He gives me direct advice when I ask him (normal caveats apply) and has suggested I fix now and fix long…. I was a little unsure about the 7 year bit…
I like the idea of peace of mind…. I guess that comes at a fee (or maybe not?)
I took out a 5 year fixed in Feb 2021, at 1.43%. Hopefully interest rates will get fairly low again by the time I need to remortgage.
Now I wish I'd fixed for 10 years - but pros and (significant) cons of that.
Depending on the lender, various other elements etc and whether they pay and whether your FA charges a fee for ‘porting’ I’m happy to have a quick chat if you want so you know what to ask him. Message me if you do and I’ll give you my number.
We took a 10 year fix at a smidge over 2% back in April/May. Suited us a we didn’t imagine they’d get much cheaper and like the security.
Well done you. Ten years of certainty at that low rate must be a very nice place to be.
I’ve no financial expertise whatsoever but snapped it up, seemed a no-brainer at the time.
Certainly the security of knowing what out commitments were going to be until the end of the mortgage was front and centre. I count myself lucky mate.
Lenders rarely get it wrong with their long term fixed so they will probably win the gamble but for peace of mind that is a good deal. Rates are high at the moment as most lenders are suffering with too much volume so are using rates to stem the flow of business.
Similar, I placed mine on 10 years at just under 2%. I couldn’t see the rates going as cheap as they had been again any time soon. Ideally I wanted 7 years, as if calculated that I might be in the position to pay it off completely within 5-7 years, but I felt the deal at 2% meant that I should have opportunity to get better than that rate if return on any money that works have been used to pay off the mortgage for the remaining 3 years - fingers crossed the man maths work out correctly lol
It's just a matter of time...
I remortgaged last month for 2y. Rate was about double that of early spring but I needed to wait until the last month to do a penalty free overpayment. I think 2y will be enough to see where things are in 2024, and if we need to sell our watches to eat!
Gents, apologies for hi-jacking the OP's thread but several knowledgeable members have already replied in here so I'm hoping they'll express an opinion for me too....
My current mortgage deal expires in 43 days and I have (had?) every intention of paying it off in full: for full disclosure we were repossessed thirteen years ago when I went bankrupt: we rented for six years during which time I suffered depression/felt like a daily failure and I swore that once I bought another home "it'd never happen again".
If I do, I'll have some 10-15 years "enough-to-live-on-but-no-flash-holidays type money" left in liquid assets/the bank.
If I don't, I can re-mortgage with current lender at 3.54% for 2, 3, 5 or 7 years.
However....!!
My MD and a colleague are both telling me that I'd be foolish to settle my mortgage when it's "cheap money if you need it" but I'm well aware that they both have a very much vested interest in me still having monthly financial commitments to meet, ie: both their lives are very much easier while I'm on the firm.
Work is very "up and down" at the mo' though, my MD talks daily of selling up/mass redundancies etc, and I personally think the "peace of mind" of owning my own home would be invaluable.
However (again...!!)
My wife had cancer six years ago and I paid for many of her tests and much of her treatment privately, I'm ever aware that this could all too easily happen again and knowing I can cover it if it does, I'm sure gives my wife peace of mind.
I also have three grown up children who have known for the last few years that "The Bank of Dad" is there if needed and that gives them peace of mind.
So anyway my question is Gents I guess, should I clear the mortgage now and just re-mortgage if the need ever arises, or should I simply re-mortgage and keep making the monthly while I can, or maybe even do something in-between?
Fully appreciate this is a personal decision/"First World Problem" Gents but I'm sure like many of you, 99% of the people in my life have a vested interest or 'angle' of some kind or another and you guys purely unbiased opinions would be welcomed please, thank you.
First of all we’re all different.
So for what it’s worth if it was me in your exact situation I would look at a 2year fixed rate and evaluate my situation every time it came up for renewal.
That way I’m borrowing at a cheap rate while holding my capital should it be needed elsewhere. Plus I’d look to over pay an amount I’m comfortable with and bring it down that way.
In 2,4,6,8 years time the situation may be different and you can react accordingly.
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U.K. government debt heavily selling off today.
5 year gilts increased this morning by 16 bps, or 0.16 percentage point this morning alone.
Now up 150 bps of 1.5 percentage points in the last 6 weeks. That not far off doubling of rates in just 6 weeks.
That is a massive move is such a short period of time.
Higher fixed rates coming to a new and re-mortgages very soon.
Spuds I'm not smart at all so please don't take this as informed advice but I'd be tempted to just pay it off for peace of mind and see how work goes with no power over you or go for a two year deal and see how it goes.
Spuds based on what you’ve said about things that happened previously I’d just pay the mortgage off for peace of mind. As you said you could always borrow again if really needed.
As you were considering keeping the mortgage why not put the monthly payments into a pension or stocks and shares ISA and build up some extra funds that way? Doing it monthly gives you pound cost averaging which might be good in this volatile period. If you’re under 55 or a long way off the ISA may be better if you feel you may need to access it. If not the pension as you’ll also get tax free and could access it at 55 if really needed.
No one has mentioned tracker rates yet.
My 5 year fix comes to an end next summer and I’m thinking of going for the cheapest tracker deal.
That way, you’re paying a lower rate than if you fix and if things come down again, you’re immediately benefiting.
OP, if you say you can easily afford the monthly payments whatever the rate, then it sounds like a tracker would be an ideal match for your needs.
@spuds take this with a pinch of salt as its just a personal opinion, but peace of mind trumps financial gain in my book.
It gets rid of one massive commitment that you no longer have to think about. I know on paper you should use your funds elsewhere because rates are still fairly low but there's a lot to be said about being mortgage free.
I was in a postion a couple of years ago to have the mortgage paid off in 5 years time but things have now changed, closed my business in April and moved onto part time employment with a view of starting an OU degree in Feb 23.
Feel 100% better personally and mentally but ideally I would have liked to start my midlife crisis after the mortgage was paid off.
Spuds, similar position in Feb next year for us. Savings in place to pay it off & we plan to once the fixed rate ends. The other half of the mortgage is already paid off & that’s going straight into pension at source.
The freedom of not ‘having’ to have an income of certain level is going to be great, but to be fair I plan to keep working to top the pension up further, it’s not that bad but at 46 it’s not going to last my hopefully long retirement!
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Gents thank you all for your replies.....
I got home from work last night to a letter from our lender which prompted the same discussion with my wife, which was overheard by my youngest who at 23 is the only 'child' still living at home.
This is the same 'child' that never did know we'd been repossessed until we bought the next place, (he thought we'd simply moved home out of choice) prompting this toast from him on moving-in day and this picture as a housewarming present from the three of'em a few days later.
So anyway, he buggers off to Asda, comes back with four bottles of wine and says "for ~~~~'s sake Dad please just pay it off, you can be a right prick when your stressed at work** and we all want you to have the choice of being able to tell your Boss to poke it even if you choose not to."
(**this bit was half in jest I hope but to be fair he does have a point, I do get just a tad (?!) stressed and I can be a prick sometimes!!)
So anyway decision made to pay it off and then we got slowly slaughtered while we watched The Godfather together.
(and sitting there chatting rubbish and getting drunk with him was just as good as knowing we'll be mortgage free in just a few weeks.)
Thanks again for the sounding board Gents, sincerely very much appreciated.
Very pleased for you Spuds!Gents thank you all for your replies.....
I got home from work last night to a letter from our lender which prompted the same discussion with my wife, which was overheard by my youngest who at 23 is the only 'child' still living at home.
This is the same 'child' that never did know we'd been repossessed until we bought the next place, (he thought we'd simply moved home out of choice) prompting this toast from him on moving-in day and this picture as a housewarming present from the three of'em a few days later.
So anyway, he buggers off to Asda, comes back with four bottles of wine and says "for ~~~~'s sake Dad please just pay it off, you can be a right prick when your stressed at work** and we all want you to have the choice of being able to tell your Boss to poke it even if you choose not to."
(**this bit was half in jest I hope but to be fair he does have a point, I do get just a tad (?!) stressed and I can be a prick sometimes!!)
So anyway decision made to pay it off and then we got slowly slaughtered while we watched The Godfather together.
(and sitting there chatting rubbish and getting drunk with him was just as good as knowing we'll be mortgage free in just a few weeks.)
Thanks again for the sounding board Gents, sincerely very much appreciated.
I did the same at Christmas with middle son, slowly smashed watching The Godfather, sans mortgage discussion though!
FantasticGents thank you all for your replies.....
I got home from work last night to a letter from our lender which prompted the same discussion with my wife, which was overheard by my youngest who at 23 is the only 'child' still living at home.
This is the same 'child' that never did know we'd been repossessed until we bought the next place, (he thought we'd simply moved home out of choice) prompting this toast from him on moving-in day and this picture as a housewarming present from the three of'em a few days later.
So anyway, he buggers off to Asda, comes back with four bottles of wine and says "for ~~~~'s sake Dad please just pay it off, you can be a right prick when your stressed at work** and we all want you to have the choice of being able to tell your Boss to poke it even if you choose not to."
(**this bit was half in jest I hope but to be fair he does have a point, I do get just a tad (?!) stressed and I can be a prick sometimes!!)
So anyway decision made to pay it off and then we got slowly slaughtered while we watched The Godfather together.
(and sitting there chatting rubbish and getting drunk with him was just as good as knowing we'll be mortgage free in just a few weeks.)
Thanks again for the sounding board Gents, sincerely very much appreciated.
Superb spud!
In the original question the statement of well over 60% LTV is important as potentially softening Property Values ( PV) higher Probability of Default (PD) will result in higher rates for higher risk borrowers and renewed requirements for insurance to cover higher LtV.
Personally, I’d take it for the certainty but look at the penalties on an opt out.
I was just reading this thread and about to concur with those saying to clear it, or offer the alternative of an offset mortgage which would offer a compromise position. The main issue being that having looked for one for an existing client there are very few available.Gents thank you all for your replies.....
I got home from work last night to a letter from our lender which prompted the same discussion with my wife, which was overheard by my youngest who at 23 is the only 'child' still living at home.
This is the same 'child' that never did know we'd been repossessed until we bought the next place, (he thought we'd simply moved home out of choice) prompting this toast from him on moving-in day and this picture as a housewarming present from the three of'em a few days later.
So anyway, he buggers off to Asda, comes back with four bottles of wine and says "for ~~~~'s sake Dad please just pay it off, you can be a right prick when your stressed at work** and we all want you to have the choice of being able to tell your Boss to poke it even if you choose not to."
(**this bit was half in jest I hope but to be fair he does have a point, I do get just a tad (?!) stressed and I can be a prick sometimes!!)
So anyway decision made to pay it off and then we got slowly slaughtered while we watched The Godfather together.
(and sitting there chatting rubbish and getting drunk with him was just as good as knowing we'll be mortgage free in just a few weeks.)
Thanks again for the sounding board Gents, sincerely very much appreciated.
get it paid off and save the monthly sum into an ISA (at least you still have access to the entire fund if needs be) and be a little bit smug that you've paid off your mortgage. Well done on recovering from previous issues to get yourself here.
unfortunately my fixed rate runs out next October!
Nice one spuds. There are always smarter things to do with money but I'd do the same thing if I could. Definitely worth having a clear and free mind.
After speaking with a friend who works for the Bank of England at its headquarters. We have took out a new mortgage and opted for 10 year fixed.
Our friend has bought himself out of his mortgage to also choose a 10 year fixed.
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Thanks again Gents, your feedback and opinions have provided not only clarity but also peace of mind that we’re making the right move, thank you.
Not that it matters to me but may I please ask why?
Should one take it that you and your friend predict big increases in interest rates?
I would gently suggest that thousands of people work at the BoE and I doubt many (any?) of them really have the slightest clue what rates will do over the next 10 years.
I managed to fix for 5 years at 2.12% a few months ago, before rate rises started to happen. Really think I made a good decision there though arguably should have looked for a 10 year..
Some great reading on this thread, plus nice story spuds - must be a great feeling!
As highlighted, it is a very personal choice and everyone's circumstances and family situation is different.
Out mortgage deal came to an end at the start of September. We were on a 2 year fix previously.
We applied for a deal with a different lender as early as we could and then waited to complete, which we did at the start of this month. Our rate went up form around 1.2% to 2.27%. I was really not happy with the increase in interest cost at the time but now it feels reasonable, on a 5 year fix.
Let's see what happens later today, if the rumoured .75% increase happens, that will create some turbulence in the market. Personally, I don't think rates will get to 5-6%+ in the next 2-3 years. But anyone on a reasonably sized mortgage surely cannot take the risk!
Hi
We are following the advice he has given us because he is anticipating further rises.
Hope this help Spuds
Jon
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Thanks again Gents, just as well I’d decided to clear it, the recent rate hike upped the new deals on offer by at least £120/month!!
That £120 is better in your pocket than theirs.
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