AIBU to take out this mortgage?

On short-vs-long fix, the way I see it is:

If you go for too long a fix, the worst case scenario is that you pay more than you need to buy less than you can afford, so you don't have enough money for nice holidays and other luxuries.

If you go for too short a fix, the worst case scenario is that you need to pay more than you can afford, so you don't have enough money to pay the mortgage.

WHY are people scaremongering with "take a lodger" shit?

Mortgage is £1600 that leaves nearly £3000 for everything else, for a young couple with no children!

Hopefully if nothing else this thread highlights the reality if vet salaries. So next time you're in a vet surgery, please be appreciative of the overworked (and underpaid) vets you come across. To say nothing of the vet nurse wages, which are often minimum wage..

I won’t say if you should do it or not or 2 vs 5 fixed… Mostly because your info is a bit general.

That being said you are asking the right questions and thinking in realistic terms so on that basis I think you should trust your gut.

It seems do-able. Go for it.

As a side note, is there promotions or potential to earn a higher income in the future? It's always good to have a "buffer" if you need.

Best advice I'd give, is pay extra, from the very first repayment, if you can. Even $25 or $50. It adds up over the course of a year.

'Rates have been 8-15% in the past'

Yes and country was a s-show; I doubt it will go this high again. Sorry I would not be fixing my mortgage based on that figure.

People who fix for 5-10 years might be playing it safe, but they're more likely to lose financially compared to flexible folks. When you're flexible you don't get a piece on mind but usually win financially.

That's how life works with taking some risks.

It's up to you OP, would you rather safe, or some risks but likely to gain £££.

'There are people who went for 2 year deals 3 years ago who are absolutely kicking themselves (and were probably poorly advised) because they're now facing much higher rates when they could have been locked in at 1-2% for the next 5-10 years.'

But that's a completely different scenario. Interested rates were historically low and could not go ahh lower - obviously fixed would have been better back then.

Now the interest rates are expected to drop. I doubt they'd go hire.

OP can you ask your mortgage broker or a bank for a financial model you can toggle that shows savings and losses overtime if you are to borrow for fixed vs variable? I work in data and could prob build something simple in 1/2 day, maybe some of your friends (who have bought a home) have a spreadsheet/model they can share with you?

I would go for it but beware, 5 yrs will go by in a flash. If you aspire to having kids in 5 yrs, between now and then you will need to:
Renovate the house
Pay off student debt
Pay for a wedding
Overpay the mortgage to remortgage at something lower than 40 yrs (ideally)

And then be ready to come up with childcare costs and savings for maternity leave (assuming you are self employed as a vet)

It's completely doable as your salaries should improve too but you will have to be really disciplined about spending and your life plans if you want this house.

Does a newly qualified vet, presumably with student finance to repay, really normally earn over £80k a year? Wow!

Nobody can predict interest rates or what will happen in your lives

If you take the 5 year fix, you will know exactly what you need to pay

I don't think a lot of people realise vets are salaried and don't personally see any of the £100 for dog eyedrops etc. That goes to the partners or the corporate entities that own a chain of surgeries!

Well that's nonsense https://thevetservice.com/how-much-do-vets-earn-on-average-in-the-uk/. OP has already clarified her salary and that's she's newly qualified (fairly obvious as she's 24).

You're a vet and he's a HGV driver but your combined income is only £4500? You should be earning that alone as a vet!

This. I think it's naive to take a higher rate and hope rates decrease - I think the world is so bonkers and with Trump etc shows no sign of calming down soon so we're fixing for 5 years at 4.32%. Rates have been 8-15% in the past and if you're young you forget that the 0-1% days were the exception and not the rule I'm afraid.

Snap! 10 year fix at 2.1% with no fee and we can port. I certainly don't feel stupid.

Have you checked on money saving expert mortgage comparison if you can get a better deal? Just having a quick look with the information you provided and you can get a 2 year fix with Scottish building society for 5.39% so £1550 a month plus lots more options for below the rate you quoted.

I think a 2 year fix is a massive gamble. Interest rates could easily go up. If you can currently afford the repayments on a five year fix (which would be £1469, again with Scottish building society) your salaries should hopefully only go up so this will become more and more affordable. At least you know where you stand with a five year.

Well nobody's likely to be going for a 10 year fix now, but we fixed just before Truss tanked the economy and I'm sitting here relieved I know what my payments will be for the next 8+ years. I won't know if it was the right decision until that time passes, but the peace of mind is worth it regardless.

It sounds tight to me tbh, we have a larger income and smaller mortgage (although larger car payments I suspect) so on paper more disposable income but we still need to be careful if we want to go on holiday etc. You need to draw up a proper budget with all outgoings (and a generous estimate). Do you both have critical illness cover? Do you have pets? Pet insurance? Internet, Netflix, Amazon Prime, Spotify, Disney Plus, gym memberships, any other subscriptions need to be accounted for because they seriously add up.

However, I do appreciate that it's probably your best option in the long term, and I paid a £500 mortgage on a £1500 income when I bought my first flat so it's doable if you live on a budget (which at your age you're probably used to). I guess I'm saying don't overstretch yourself to the point you can't travel or enjoy yourselves at all, you don't get your 20s back. The 40 year term also makes me balk, but you can overpay/shorten that in future when you remortgage. I'd also go for 5 years as I'd want the security of knowing our payments won't go up in two years. Yes rates might drop, but you don't know.

I don't think we are ever going to see rates as low as they were. They were kept artificially low for a long time and one of the primary reasons for high inflation. I would fix for 5 so you know what you will be paying for the next 5 years especially if it means a £2400 saving per year.

Normally the benchmark is one third of income on housing so bang on in your case. What are the rates for fixing on 5 years?

I would go for the 5 year fix too. I fixed for 5 years last year because I wanted the security. Interest rates won't necessarily drop hugely in the next 2 years.

@helptodecide with the election, war in Ukraine and other things I’d take the 5 yr deal and rest easy knowing you won’t get any nasty shocks. Check the early redemption penalties (eg ours we can overpay upto 10% of mortgage value per year, any more and we hit the penalties. But at 5yr and 1 day we have no more penalties. Save any excess. But either is fine to be honest. I’m assuming it’s a repayment mortgage (paying off the money borrowed and interest, not interest only?)

I’d go for the 5 year fixed if it’s 200 per month cheaper as this is a significant difference. That’s €4800 over two years saved compared to the €1600 per month mortgage. If you wanted to move to a cheaper mortgage provider after a couple of years your mortgage provider will charge a fee to break the fixed term rate. This is usually a few hundred but you could check what this fee currently is now. There are mortgage providers that offer cash back if you switch your mortgage to them, this could offset the breakage fee when the time comes (assuming you are happy with the new mortgage terms such as interest rate etc)