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To fix or not to fix and how long to fix for?
Just about to exit our latest fixed term (5 & 10 years) and a quick check using online calculators appear to show that we've been getting right royally shafted with half the borrow at 5.99% and the other half at 6.49%. At the time it seemed sensible, Northern Rock had just crashed and everyone was uncertain about the future.
Now that we will be free of penalties it looks like we can save up to £200/month by switching lenders and I'm happy with fixed rates as it allows us to budget.
The question is should we go greedy and fix for a short period (2 years) to get the best rate and biggest saving or fix for longer (5 years) to get piece of mind and a smaller saving?
Either way it's a win...but what are interest rates going to do in the next few years?
[quote=jamesy01 ]
Either way it's a win...but what are interest rates going to do in the next few years?
It's anyones guess, but they are at a historic low....
Don't fix. And don't pay attention to Internet advice.
I've never fixed and reckon I've come out on ahead - but I was happy with the risk.
Look at the deals around for your LTV, it seemed that we'd be asked to pay 2.5% above base for a variable, and 3.49% on a fixed. So it'd take a 1% increase to mean the tracker was a worse deal. I went for stability with the fixed. It might not be the perfect situation, others may prefer the risk, but I prefer knowing my payment amount for the next 3 years.
You can save heaps more in the long run if you find a good deal, but keep paying what you were paying before.
Dont forget to add the potentially massive arrangement fee for the full cost of a fixed term lower rate
HSBC lifetime tracker if you have a good ltv. Fee free and unlimited overpayments and no exit penalty. T&C's may apply. 🙂
5yr Fixed here.
5 year fixed here. It depends on what you want. I wanted the security of knowing my mortgage isnt going up at all in the next 5 years, even though it will probably end up costing us a few quid extra in the long run. I simply overpay slightly to reduce the Capital a bit quicker.
In this dilemma myself...I reckon if the mortgage is a smaller % of your income you can take a risk with a tracker and save in the long run. If your mortgage payment jumping a big chunk would put you on the breadline then probably best to fix so you can budget accordingly
I just took out a 5 year fixed deal on a low interest rate. Nobody knows for sure when interest rates are going to go up but it's very unlikely that they are going to go down any further.
Also the deal i got, i never had to pay a fee to set up the mortgage so that saved about a grand straight away!!!
With hindsight I know taking out a tracker mortgage five years ago was a good gamble. My mortgage payments are 40% a month less than when I started.
No idea what'll happen in the next five years but any fixed deal is considerably more expensive than the current nationwide base rate so I'm not moving anytime soon.
I've always gone with a variable rate, and whilst there have been times when I've been paying more than I would have been had I been on a fixed rate, on the whole over the last 15 years I am many 10's of thousands pounds better off for being on a variable rate.
Thats not to say you should also be on a variable rate, unfortunately this is one of those things were your specific circumstances will determine what is best for you, its a very difficult thing to predict what will be best for you. Does anyone have a crystal ball?
No idea what'll happen in the next five years but any fixed deal is considerably more expensive than the current nationwide base rate so I'm not moving anytime soon.
This applies if you are taking out a large LTV but if you already have equity in your property than the fixed rates are reduced substantially. For me it worked out at £20 per month extra to fix for 5 years which may or may not work out better in the long run but at least i know what i'll be paying every month.