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Mortgage advice(14 Posts)
Our mortgage is now at a stage where it's not worth an arrangement fee (90k, 8 years left), we got a 4 year fix at 2.69% from Nationwide with no fee. We overpay regularly, so should get the mortgage pretty much gone by the time the fix ends.
The advantage of my spreadsheets over the simple calculators is that you can actually SEE how the balance on the mortgage changes .... if you open two copies of it you can compare the two deals and see whether the arrangement fee is actually offset by the lower interest rate (chances are NOT)
It's finances balanced with feelings. I went through this recently but with three years versus five years. Are you likely to want to move in that time? That is significant. I think it might be worth using a broker. The Halifax person can only sell you a Halifax product. What is your loan to value? FWIW, I'm about to get 5 year fixed at 2.99%. And I agree, MSE is very good.
Please take the wise advice of the posters above - educate yourself on the available products and be very aware that someone is trying to make money off you at somepoint in the process.
www.moneysavingexpert.com has a good 'beginners guide' to mortgages.
There are some really good deals around at the moment so do not take the first offer!
(I have a 5 year fix, it is at 2.79% and there were no fees payable.)
This calculator from MSE may help you consider your options.
The reason that lenders like longer term fixes is that they know that they will have your business for that length of time (as there can be exit fees if you decide to change mortgage during the fixed rate period).
Recently the new Governor of the Bank of England stated that he does not expect to raise the base rate until unemployment drops by a very significant amount (I forget the actual figure), which has given more lenders the confidence to offer longer term deals.
In my case it made me look at Tracker mortgages, these often have lower rates than Fixed but obviously will go up if the base rate changes. I decided to look at how much the base rate would need to change for me to be paying the same as on a fixed rate mortgage and I would need the base rate to change by more than 1% before I was even paying the same as the fixed rate payment. This allows me to budget accordingly and make overpayments in the meantime.
It really depends what you want from your mortgage - do you prefer to know that you will have that same outgoing every month for 5 years? Or do you see your circumstances changing before then and may want the flexibility to change your mortgage accordingly?
There are also some fee free mortgages out there currently, no set up fee, no exit fee and some allow overpayments (if you have any spare money).
Like others I'd say have a look around several places and see what there is on offer - also remember not all lenders are included on comparison sites so there are some you are better off checking with independently.
compare your options on my spreadsheets ....
Is there a fee for either? Some mortgages have a huge arrangement fee, so having to rearrange every 2 years would wipe out the saving of a lower interest rate. Best to have a google and see what else is out there, as people say mortgage advisors aren't all impartial.
Agree with lonecat... I find hard selling financial products a complete turnoff. And I think a Halifax agent pushing Halifax products is NOT an advisor... They're just salesmen!
That's not to say a five year fix, or the Halifax deal in particular is a bad one... Only you can decide what you want from your mortgage. I quite like long fixes, even though I'm tied into an expensive one at the moment, and paying waaaaay over the current rates. Honestly, I'd rather pay a bit more for the security that whatever happens to the base rate, I can cover my mortgage repayments. But that's a very personal position. Other people like very low rates so they can overpay and build up a rainy day buffer. Neither option is right or wrong. Just bear in mind that when the rates are rock bottom, your repayments should be comfortably in your reach... Like somebody said, there's only one way they're going to go.
Before inning anything with the Halifax, at least check out online comparisons... They won't find all the best deals, but it'll give you a clue whether your friend at the Halifax is offering something competitive, or a complete donkey. You might even find some grounds for negotiation... Waive the fees or something. Got to be worth a try.
He is there to advise you, not to tell you which mortgage to take. I have to admit if someone was hard selling a particular product I would be suspicious that their commission is higher on that product.
Bearing in mind that the Bank of England has given very strong indications that the current interest rate will remain in place for 3 years I personally would not be looking to fix. Instead I would be taking advantage of cheaper trackers.
I would say do your research, have you checked out other mortgages. I have had a Halifax mortgage for 10years, we are now 5 years into a 10 yr fixed rate of 6.09 which with today's low rates is high but I do like the security of fixed. At some point the rates will go up again. 4.99 seems quite high compared to some I have been looking at.
Read some of the financial pages, such as this to try to educate yourself as to what things are likely to affect the interest rate.
At the moment, the question is when will they go up and by how much.
Consider if you will find it easier to budget if you locked in for a few years. When first having a mortgage I certainly found it easier knowing that I had to pay x amount each month, rather than it varying. Given that you are only mentioning fixed rates, I take it you either can't get on a variable rate or that you have already decided that you want the certainty of knowing your monthly cost.
So how long do you want to know the cost... you can not predict the future so in say 4 years time, 4.99% could be way above base rate, or base rate may be quite high.
Well in 2 years you will need to rearrange or go with tge svr, then it will depend in tge rates at tge time. Realistically rates can only go up, only you can decide if you want to gamble in a 2 or 5 yr fixed
Well you are "gambling" on what you think interest rates will do in future and when. From where they are now, they can only go up, so the real question is when.
Also remember that the adviser is not independent and a 5 year fix makes you a Halifax customer for 3 more years....
We had a meeting at the Halifax bank today and we got a mortgage in principle. The adviser went on and on about getting a fixed rate mortgage - fixed for 5 years. This is fixed at 4.99%. I wanted to know all about the 2 year fixed - because this is slightly lower at 4.79%. He was very adamant that we should go for the 5 year fixed and that the two year isn't worth it.
This has confused me. What are the benefits of 5 years? all well confusing
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