What are your plans for an increase in interest rates and inflation?

[howtorebuild]

When this financial bubble bursts?

Unless you have a saving vehicle or a rock solid plan to pay at end of term interest only mortgages are renting you're just renting from your mortgage company

You're not renting because you're the owner of the property (albeit a property with a long term secured loan against it)

Its like renting if all you ever do is pay the interest since you would have to either pay off the loan or hand the house over to the bank at the end of the term.

But I would rather have the flexibility to know that if the personal financial SHTF e.g. DH lost his job, we only have to pay £400 a month rather than £5k. It would buy us a significant amount of time. In the meantime, even if he never found another job, we could stay in a very large house for £400 per month "rent" for the entire duration of the mortgage - whereas a family with a repayment mortgage would be repossessed and renting at market rate after a matter of months since they would have defaulted on their payments.

Interest only mortgages are a bad idea if you can't afford the payments and can't afford to repay the capital at the end of the term and have no plan to repay the debt. But this is the prepping board, we plan!

Guess you could hurl the heavy ingots at invading marauders

I don't agree with my friends theory - she is sitting in a huge house waiting for it to increase in value so she can maximise her profit when she sells. Surely it's best to sell now and have the money in your pocket?

I've got a council house so not worried about that aspect. If I had cash id be looking at land.

I did have gold but had to sell boo hoo. :( you can't eat it when push comes to shove and if you really need to barter/sell fast ... I don't think bitcoins are worth the paper they're written on!

Work wise I have a "varied portfolio" and can turn my hand to almost anything.

Question for someone

We were 1st time buyers got a mortgage at 4.2% which costs us £1550 a month

We due to come to end of 2 year term and want to stick with provider, husband is a expat and paid in $ so company's were limited

Anyway would we be better getting a new 2 year deal or a longer 5 year one

2 year is 1.69%
5 year is 2.39 %

No plans to move just want to keep payments as low as possible

What's the fee? That makes all the difference

No fees

We trying to plan ahead and wonder if longer is better if things do go up , the deals in two years might not be as good as we getting offered now. We unsure of what to do for best

It all depends on your own financial circumstances. Nobody knows for sure what the rates will do. They won't stay this low forever but there are certainly reasons for keeping them low atm.

If you need the certainty for a longer period then go for the longer fix.

Salene, how much difference is there in cash terms between the 2 rates ?

If it is a minimal amout per month then go for the longer term if you want the certainty, i guess it all depends upon how much the mortgage is for and what the actual difference is in cash terms and what that equates to as a portion of income

New deals are

2 years - £1130 1.89 %
3 years - £1196. 2.39 %
5 years - £1223. 2.59 %

We currently pay £1550 and are going to keep paying that even with new deal as a over payment for now as long as nothing changes with jobs etc

We just unsure how many years to pick

5 years would be 9% of monthly income before tax. So the payments are low in comparison to our joint income, but the industry (oil & gas) is in crisis and either of us could be let go at anytime. So we need to keep that in mind.

So it's going to cost £90 a month more to fix it for 5 years than it does for 2

Which means in the first 2 years of paying the higher rate you will have paid £2160 more than on the lower rate in interest, but if rates go higher you are better on the long term fixed

I think at only a small difference per month I would fix for longer and as you plan to overpay as much as you can

Well the other way to look at it is if employment position is dodgy than fixing for longer gives more certainty over what you need to find every month

If you got to the end of 2 years and where let go and couldn't get another deal with no job you would be screwed if rates moved, if you were still fixed for a further 3 years then at least you have a fixed figure to work to for trying to earn enough doing something else

Zombie the job situation won't matter we already checked this and current provider said as long as we not looking to borrow any more money (which we wouldn't be) we won't need to provide evidence of employment as just changing product as its already been approved when we originally got the morgage

Of course if we want to change company it would matter but as our provider is pretty competitive and the different isnt much we happy to stay with them