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Original poster

Is it a dumb time to take a fixed rate for five years???!!

43 replies

ipanemagirl · 15/10/2008 14:16

Am so baffled about what to do.... all financial advice just sounds like hot air now!

I've got a goodish rate with a relatively secure bank...

OP posts:

CatIsSleepy · 15/10/2008 14:21

lord knows ipa
we took out a 10-year fix with our bank last year

not all (or any?? not sure) of the banks seem to be passing on the recent interest rate cut

(how's the new babe btw?)

happynappies · 15/10/2008 14:24

there isn't really an answer - if you fix for 5 years you risk interest rates coming down and 'paying over the odds' as it were, but you'll know your outgoings for five years. If you take a tracker you'll benefit from interest rate cuts - I think there are suggestions that the rate will be cut a bit more to bring inflation under control - but of course they could go up again and you could then end up paying more.

They have to pass on the interest rate cut to people with a base rate tracker.

saythatagain · 15/10/2008 14:26

Its been mentioned today that the interest rate is going to be cut quite drastically over the next few months. How true this I don't know. We're on one that moves with the rate so I'm rather hope its true. Goodness knows what to do for the best!

Bramshott · 15/10/2008 14:26

We have always gone for a 5 year fix in the past because I need (control freak me!) to know what my outgoings are going to be. Whether I would now - I don't know - but the rates are still fairly low aren't they?

Original poster

ipanemagirl · 15/10/2008 14:41

Thanks for advice. I just feel like the rates are unlikely to come down hugely as the banks are all so broke now....

Catis - she's adorable and very well and ASLEEP (phew) which is why i'm at the desk in a financial fret!!!!!

We keep watching Nesnight and frightening ourselves half to death of going to hell in a financial handcart!! It's all so mindnumbing.....

OP posts:

RhinestoneCowghoul · 15/10/2008 14:45

The thing about fixed rate deals atm is finding a decent rate without huge levels of fees. We remortgaged just before Christmas last year and ended up going for a tracker as the fixes were too high.

scaryteacher · 15/10/2008 14:45

There has to be a margin below which rates can't fall for the banks to make a profit and pay back the govt and the shareholders. If the libor rate is high, then they'll lend above that, despite what the BoE rate may be.

We took a fix at 5.09 for 5 years in Dec 06, and when it expires I'll do the same again. This is my 4th fixed rate in 18 years, and I don't regret it at all. I always knew what the payments would be and can remember feeling very smug in 1992 when we left the ERM and rates when through the roof, and mine was fixed.

expatinscotland · 15/10/2008 14:46

i can't believe how people here don't have a fixed rate for the course of the mortgage.

i mean, if the interest rate drops you can re-mortgage, but at least you don't get stung when it goes up and your mortgage ends.

Swedes · 15/10/2008 14:49

I think interest rates are likely to come down. I would not go for a fixed rate unless you find it impossible to budget without a fixed rate.

LilRedWG · 15/10/2008 14:53

It all depends. If you can afford your payments if rates go up then don't do it and take the risk, but if you want the security of knowing exactly how much you are paying each month, then go for it.

FWIW - if you want to see what others are doing - we have a 25 year fixed rate. Sure, sometimes we'll be paying over the rates but other times we are paying under (it's fixed at 5.65%). What it meant to us is that I knew that I could give up work to be with DD because we know what our monthly commitments will be.

Original poster

ipanemagirl · 15/10/2008 15:02

i didn't know you could geta fixed rate for the life of the mortgage but I am financially moronic generally. it all gives me The Fear.....
but why would rates come down significantly when all these banks are going to need to generate more money?

OP posts:

Original poster

ipanemagirl · 15/10/2008 15:03

where did u get that rate from lilredwg?

OP posts:

MorticiaDoom · 15/10/2008 15:08

I have just been talking to a financial advisor about the same thing and am going for a 5 year tracker mortgage BUT, and this is a big but, my loan to value is in my favour and my repayments will only be £369 a month. We worked out how much extra I would be paying if the base rate went up by 2% and it was only another £40 a month. At the moment the fixed rates are not great and I can get 5.39% on a tracker. Also I can change my tracker to a fixed rate but not vice versa.

scaryteacher · 15/10/2008 15:08

Expat ours is part interest and part repayment, and the only way to avoid paying early repayment fees when the endowments pay out was to have a 5 year fix, otherwise I'd have gone for a 15 year one.

It won't cost me the thousands I'd lose to pay an arrangement fee to remortgage.

LilRedWG · 15/10/2008 15:10

We got ours four years ago from Cheshire Building Society.

solo · 15/10/2008 15:11

My 5 year one is coming to an end. I was very pleased I took mine out for 5 years.

lulumama · 15/10/2008 15:14

we got a fixed rate via an IFA for 3 years with £150 fees upfront and the rest added to the mortgage. seemed like the right thing for us when all is in turmoil.. rate is 5.89 so more expensive than previoulsy but at least we know where we are

scaryteacher · 15/10/2008 15:21

I've just paid off the £800 of fees from when we took out the mortgage.

DaisyMooSteiner · 15/10/2008 16:08

If you go for a tracker then it's pegged to the Bank of England base rate so they always reflect increases and decreases in their base rate.

chequersandchess · 15/10/2008 16:12

"i mean, if the interest rate drops you can re-mortgage"

Not unless you are prepared to pay a redemption fee for re-mortgaging before the end of the term, unless I have missed something.

My friend in the States says she can fix for the life of the mortgage and re-mortgage without a fee but it's not like that over here to the best of my knowledge.

DaisyMooSteiner · 15/10/2008 18:07

There are some lifetime tracker deals around where you can switch to a fixed rate with no redemption penalty.

Nagapie · 15/10/2008 18:10

Nationwide have a deal where you can switch from a variable rate to a fixed rate without having to pay fees for the term of the mortgage (I think) ...

Rates are better for those with a big deposit or a lot of equity in the property - understandable in this climate ..

DarrellRivers · 15/10/2008 18:11

We opted for a 10 year fixed rate recently, following a much lower fixed rate period coming to an end.
It was scary to realise how much repayments increase when rates go up.
With our new fixed rate, we know we can afford the payments for the next 10 years and we also got an offset so that we are not paying interest on the whole amount.
I feel much better
All these expensive fees as well changing fixed rate every few years add up as well

Orinoco · 15/10/2008 18:12

Message withdrawn

solo · 15/10/2008 22:00

DarrellRivers, can I ask you who that is with please and what the interest rate is? My fixed is coming to an end in a couple of months and I'm starting to worry...

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