Mortgage overall or tie in interest rate?

[karron]

Hello all,
We are looking for a mortgage at the moment and can only do a deposit of 20% and a 5 year tie in. THe house needs some work and we would hope that these works would increase the value but realise in the current market we may be lucky to have the house retain its value.

We have found a mortgage with a very low interest for 5 years but its overall interest rate for the 25 years is rubbish. We intend to find a new mortgage at the end of the tie in so are wondering how important the overal interest rate is.

The other option is to have something with a better overall interest rate but pay more during the 5 year tie in.

We can't decide and would appreciate some advice.
Thanks

What makes it rubbish overall, is it the fees or the interest rate it goes to after the 5 years? Most mortgages tend to revert to SVR after the tie-in period, however the overall cost of borrowing also includes product fees so if these are high it will make the overall price appear higher.

It's the interest rate after the tie in ends, it must track higher above base rate than other products avalible at the moment. The product fees are about normal with free valuation.

What is the rate you'll be paying for the 5 years?

3.29% which is the best we've seen. It's whether to go with this and hope we can change to a better deal in 5 years time or play it safe and go for something that is higher now but will revert to something lower later.

3.29 is good. What does it increase to?

5.99% so it is really high. Obviously the plan would be to remortgage after 5 years.

I would probably go for it. The only thing that would stop me is if there will be any change in your circumstances which might make it hard to remortgage in 5 years - mat leave, childcare costs etc.