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Mortgages- opinions please

(5 Posts)
FrankiesMonster Wed 16-Nov-16 12:10:03

Our fixed deal ends next month so looking at our options. We can go onto variable rate of approx 3.8% or look at going onto another fixed rate.

Can't decide whether it's better to go onto .99% on a 2yr deal (and then risk a higher variable/fixed term interest rate) with around £1k fees. Alternatively, I can stay with current lender on a 10yr fixed plan of 2.8% and lender will pay us £250.

From what I've been reading, it is possible rates may go up over the next few years due to stronger market which is why I'm wary of paying fees for a low rate which may not benefit us financially in the long run.

Any advice on what you think is best option and why?

Searchist Wed 16-Nov-16 12:14:53

There's a lot of other variables to consider such as current debt and time expected to pay off. For me the 10 year fix appeals but wouldn't be right for everyone

namechangedtoday15 Wed 16-Nov-16 12:41:27

The other point to bear in mind is that you are reducing your debt with each payment, so although rates may go up (if you stay at a similar LTV), you may get a similar or better deal because you need to borrow less.

So on a 10 year fix, you're paying 2.8% for the whole of that term (on the basis - just plucking a figure out of the air - based on 80% LTV).

But, in 3/4/5 years say, you'll have paid off some of the capital as well as the interest, so you might only need say 60% LTV. Obviously the lower the LTV, the lower the rate usually. Worth bearing in mind.

FrankiesMonster Wed 16-Nov-16 13:02:52

Thanks for responses- LTV is 60% (so I think this means we qualify for the 'best' interest rates?).

Our original mortgage was for 25yrs, so we have 21yrs left but if we were to tie in for 10yr fixed term then we could reduce this to 16yrs and still be paying slightly less than our current monthly repayments.

I am tempted with the 10yr deal but DH is equally tempted by the <1% interest rate!

rallytog1 Wed 16-Nov-16 13:42:25

Could you go for the lower deal, then overpay? That way if you're faced with a higher rate at the end of the fixed term you're already used to budgeting for a higher monthly payment. And you'll have paid more off, so could potentially reduced your LTV.

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