Any mortgage/financial advisers in the house?

[BRISTOL86]

Would you go into a five year fixed mortgage right now? 

Long story short we are 1 year into a 2 year fix on our first ever mortgage. We had only a 5% deposit so obviously 95% LTV. 

'The Plan' was progressing quite nicely - house prices slowly rising and we were confident in getting to next year and being able to get into a 90%LTV product without having to find additional cash (house value now should allow us to remortgage now at 90%)

Now there's lots of scaremongering about house prices falling etc...I know nothing will happen instantly but I must admit to being worried about the possibility of getting to next near and having to stay on our current mortgage when the initial term ends, as the rate will be horrendous. 

I've done some maths and the penalty fee for exiting our mortgage now will be £600 more than what we'd save on our mortgage in the next 12 months. However our outstanding balance in 12 months time will be £1,800 less on the 5 year fix deal as the rate is nearly 2% below what we're currently on  

So in real terms we'd actually be better off in 12 months time spending a load of money now to get off our current mortgage. 

The risk is that interest rates actually fall and that we're then locked in for 4 years at a higher rate (though worth noting that the rate is considerably lower than what we pay now)

Considering we want to start a family in the next couple of years, part of me loves the thought of a few years security on the outgoings. 

Any thoughts? What I don't want is to get 12 months down the line and find we have to stay on our current mortgage when it switches to the SVR of an eye watering 5.79%...

[daored]

3 minutes ago, BRISTOL86 said:

Would you go into a five year fixed mortgage right now? 

Long story short we are 1 year into a 2 year fix on our first ever mortgage. We had only a 5% deposit so obviously 95% LTV. 

'The Plan' was progressing quite nicely - house prices slowly rising and we were confident in getting to next year and being able to get into a 90%LTV product without having to find additional cash (house value now should allow us to remortgage now at 90%)

Now there's lots of scaremongering about house prices falling etc...I know nothing will happen instantly but I must admit to being worried about the possibility of getting to next near and having to stay on our current mortgage when the initial term ends, as the rate will be horrendous. 

I've done some maths and the penalty fee for exiting our mortgage now will be £600 more than what we'd save on our mortgage in the next 12 months. However our outstanding balance in 12 months time will be £1,800 less on the 5 year fix deal as the rate is nearly 2% below what we're currently on  

So in real terms we'd actually be better off in 12 months time spending a load of money now to get off our current mortgage. 

The risk is that interest rates actually fall and that we're then locked in for 4 years at a higher rate (though worth noting that the rate is considerably lower than what we pay now)

Considering we want to start a family in the next couple of years, part of me loves the thought of a few years security on the outgoings. 

Any thoughts? 

Hi mate, work in the financial industry. My fixed rate is up next February, the indications are that interest rates will drop to zero percent in the not too distant future. Personally, for me I will be looking to fix my rate for as long as I can.

Property prices, not sure they will fall that much in the immediate future, as that's as someone who voted to remain. In your position, see tight get the history of making the payments and see how things pan out with the markets, if the shit does hit the fan or looks likely then consider your options. Uncertain times at the minute, but in truth, who really knows. Hope that helps?

[Nibor]

Fixing your rate when it's this low is an absolute no brainer, the only question is for how long.  My view is that we're likely to see increased interest rates in the medium term because there will be less investment capital entering the country, that means higher government borrowing costs and that will bump retail interest rates.  I'm fixing mine for five years in the next few weeks having held off for a while.  I am going for five because I want the surety of knowing what I will pay during what is likely to be a few years of turmoil.

[daored]

5 minutes ago, Nibor said:

Fixing your rate when it's this low is an absolute no brainer, the only question is for how long.  My view is that we're likely to see increased interest rates in the medium term because there will be less investment capital entering the country, that means higher government borrowing costs and that will bump retail interest rates.  I'm fixing mine for five years in the next few weeks having held off for a while.  I am going for five because I want the surety of knowing what I will pay during what is likely to be a few years of turmoil.

Totally agree, but depends whether your in a position to actually do so

[Nibor]

3 minutes ago, daored said:

Totally agree, but depends whether your in a position to actually do so

Yes it does but if anybody is seriously worried but stuck in a current fixed period it is worth noting that you can actually remortgage inside a fixed term with many mortgages, often it's just that there are early redemption fees but they may not be huge and it may be worth checking what they are.

[daored]

3 minutes ago, Nibor said:

Yes it does but if anybody is seriously worried but stuck in a current fixed period it is worth noting that you can actually remortgage inside a fixed term with many mortgages, often it's just that there are early redemption fees but they may not be huge and it may be worth checking what they are.

Absolutely, just depends on how early in the tine frame you are and if there's any exclusions. Personally , can't see property prices lowering much in the next 12 / 18 months beyond that when things are more settled , who knows

[TRL]

I mailed mine in for 10 heRs at 3% a year ago. Many people thought it a odd thing to do. But for me it was a m brained living in a era when historically mortgage rates were a lot higher. I know where I am for 10 years now. Meaning I can better financially plan for 10 years.

 

It may not fit a lot of people's finances.. But I took the decision with long term financial planning and Brexit in mind.

 

I was on a tracker (which I had to leave. Long story) which tracked at .5 above base rate, so my payments have gone up some what, but I'm happy with the choice.

[Nibor]

2 minutes ago, daored said:

Absolutely, just depends on how early in the tine frame you are and if there's any exclusions. Personally , can't see property prices lowering much in the next 12 / 18 months beyond that when things are more settled , who knows

I don't think property prices will go down at all, in 2008 they only had a small hiccup and we have a massive supply problem.  Interest rates will go up and some people who have bought beyond their means or suffer job loses as the arse falls out of a few industries will sell but there'll be plenty of tories waiting to stick more money in buy to let properties where it's safe.

[BRISTOL86]

Thanks all, appreciate the advice. I'm naturally risk averse so 5 years of certainty would be welcomed. Think I may very well go for it, providing we get the valuation we need to be able to do it...

[BRISTOL86]

11 minutes ago, Nibor said:

Yes it does but if anybody is seriously worried but stuck in a current fixed period it is worth noting that you can actually remortgage inside a fixed term with many mortgages, often it's just that there are early redemption fees but they may not be huge and it may be worth checking what they are.

Yeah, our situation is that our penalty is about £3.5k but we will save c. £240p/m on the mortgage payment as the interest rate is 3.05% vs the 4.79% we pay currently. So whether we leave early (cost £3.5k but save £2.9k in a year's payments) or stay put, it costs us roughly the same, with the added bonus that we're paying off nearly £2k more capital in the first year alone at the same time as adding 5 years of security.....

 

[daored]

3 minutes ago, BRISTOL86 said:

Yeah, our situation is that our penalty is about £3.5k but we will save c. £240p/m on the mortgage payment as the interest rate is 3.05% vs the 4.79% we pay currently. So whether we leave early (cost £3.5k but save £2.9k in a year's payments) or stay put, it costs us roughly the same, with the added bonus that we're paying off nearly £2k more capital in the first year alone at the same time as adding 5 years of security.....

 

It's a gamble, my friend. If interest rates lower, which appears to be the common view and with a history of mortgage repayments (credit file etc) then may be worthwhile sitting tight for 6 / 12 months and seeing how the land lies. Of course depends on your own personal views etc. Like I said I'm in a slightly different position as rate change is due in February. If you want a contact number I can give you one 

[BRISTOL86]

5 minutes ago, daored said:

It's a gamble, my friend. If interest rates lower, which appears to be the common view and with a history of mortgage repayments (credit file etc) then may be worthwhile sitting tight for 6 / 12 months and seeing how the land lies. Of course depends on your own personal views etc. Like I said I'm in a slightly different position as rate change is due in February. If you want a contact number I can give you one 

Yeah it's always a gamble, lets face it none of us know what's going to happen, especially now! Part of me thinks getting off 95% ASAP is a no brainer though if it's an available option. Lower mortgage payment plus lower interest rate/faster reducing the balance seems like a no brainer, especially as after Y1 I can just continue to pay the current mortgage payment (effectively once I've covered the penalty cost)

[daored]

18 minutes ago, TRL said:

I mailed mine in for 10 heRs at 3% a year ago. Many people thought it a odd thing to do. But for me it was a m brained living in a era when historically mortgage rates were a lot higher. I know where I am for 10 years now. Meaning I can better financially plan for 10 years.

 

It may not fit a lot of people's finances.. But I took the decision with long term financial planning and Brexit in mind.

 

I was on a tracker (which I had to leave. Long story) which tracked at .5 above base rate, so my payments have gone up some what, but I'm happy with the choice.

See if you can do it without adding it to your mortgage, if possible

[daored]

3 minutes ago, BRISTOL86 said:

Yeah it's always a gamble, lets face it none of us know what's going to happen, especially now! Part of me thinks getting off 95% ASAP is a no brainer though if it's an available option. Lower mortgage payment plus lower interest rate/faster reducing the balance seems like a no brainer, especially as after Y1 I can just continue to pay the current mortgage payment (effectively once I've covered the penalty cost)

See if you can do it, without adding it your mortgage loan if you can

[BRISTOL86]

47 minutes ago, daored said:

See if you can do it, without adding it your mortgage loan if you can

Adding what to the mortgage? 

[daored]

59 minutes ago, BRISTOL86 said:

Adding what to the mortgage? 

Any early repayment penalty

[BRISTOL86]

6 minutes ago, daored said:

Any early repayment penalty

Ah right, yeah we'd pay that outright