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URGENT - mortgage advice

(12 Posts)
Becaroooo Wed 19-Oct-11 19:13:51

Very quick question....wwyd????
3 year or 5 year fixed rate? 4.49% and 4.89% respectively over 25 years.
(only have a 10% deposit)
No fee and free valuation on each product.
Help!!....

flatbread Wed 19-Oct-11 20:24:41

I would not go for fixed. Interest rates will probably not rise enough in the next five years to justify the higher fixed rate. If you can, go for a lifetime tracker with no repayment penalty. That way, if rates start going up, you can switch to a fixed rate product then.

JoJoMummy321 Wed 19-Oct-11 20:32:35

I agree with flatbread...this is the best as you can take advantage of the current interest rates with the peace of mind that if they go up you can fix at any time.

However, if you are really wanting to have a fixed rate, I would go for the 3 year option as I think 5 years is too long to wait to review your mortgage. After 3 years you may feel comfortable with a tracker or there may be better deals out there.

Hope this helps and HUGE congratulations on getting your offer accepted on your house!

PropertyAddict Wed 19-Oct-11 20:35:54

Depends how comfortable your monthly repayments would be if they went beyond 5%. If the answer is 'we'd be stuffed' I'd say go for fixed the 5 year fixed rate as being able to sleep at night is important. However, if you think you can easily afford to take the highs with the lows, I'd agree with flatbread and go with a tracker. It does seem a shame not to take advantage of such low interest rates at the moment. Good luck!

narmada Wed 19-Oct-11 20:37:51

We ummed and ahhed about this for ages - didn't go for the fix in the end in our case. My slight concern though is that if rates do start to rise (and surely they must) then the banks will be well ahead of us and will have bunged up their rates on fixed rate products by then. It's a toughie.

Becaroooo Wed 19-Oct-11 20:43:10

narmada It is isnt it?

We are going for the 5 year I think;

1.We arent planning to move again

2.Because of our small deposit a tracker would cost more than a FR!!!!

3.At least we will know what our outgoings will be for 5 years!!!

thanks!

firsttimemama Wed 19-Oct-11 20:45:50

Both good deals - either or - I think you have made a good choice given your circumstances.

narmada Wed 19-Oct-11 22:00:54

If the tracker would cost more, then it's definitely a no-brainer.

Best of luck with your house purchase smile

flatbread Wed 19-Oct-11 23:29:48

Forgot to say congratulations and all the very best!

If the tracker costs more, then why not the three year fixed? Really, we are heading towards a severe recession and interest rates are unlikely to rise in the next few years.

The only reason I can think of for taking the 5 year fixed is if you think you might be in negative equity in three years and have difficulty remortgaging...

Staverton Thu 20-Oct-11 01:41:07

Can I ask which bank it is with?? Looking too also only 10% deposit

Becaroooo Thu 20-Oct-11 07:50:49

IMO hsbc have the best deals atm - and out ifa agrees!!!

no fee and free valuation too!

there is a 2 year and 5 year fr atm

Becaroooo Thu 20-Oct-11 07:51:49

We are going for the 5 year FR....thanks for the advice x

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