[Closed] Mortgages....stick or twist?

Interested in responses to this too.
My 2 year deal expires at the end of the month - was considering fixing for 5yrs next time to be safe

Wait for 18mths?

Just fixed for 5 years about a month ago. Got a better interest rate (think it was 2.6 down to 2.1%) so monthly payments have reduced by £20 leaving more available to over pay. Felt it was a no-brainer with brexit round the corner.

you can get a 5 year fixed at about the %ge you have on variable ATM. That should be past brexit enough to see what rates are doing. 10yr fixed is overly cautious imo. Also big %ge fees to get out of 10 yr fixed (at least near beginning)

When I went through this about 8 years ago I was told rates were so low they can only go up so I fixed. Then they went down. 5 years later, same again, only this time they were not only so low they can only go up but they are just about to go up. Another fixed mortgage, another 3 years of rates staying low. In your situation I'd stay on the low variable rate, but I've been wrong every time so maybe go fixed 🙂

Just fixed for 5 years about a month ago.

Wish they had got their completion sums right though as the old lenders have just come knocking for £600 🙁

Rates are going up / better deals are being withdrawn at the moment so I think now is the time to act.

For added info, have a 2 year old and wife part time for a while yet so I don't consider a 5 year to be long enough. Also if it takes 2 - 3 years for brexit then the shit hits the fan it will end and a difficult time.

nickjb - Member
When I went through this about 8 years ago I was told rates were so low they can only go up so I fixed. Then they went down. 5 years later, same again, only this time they were not only so low they can only go up but they are just about to go up. Another fixed mortgage, another 3 years of rates staying low. In your situation I'd stay on the low variable rate, but I've been wrong every time so maybe go fixed

😀

Fixed mine in for as long as poss too, although I voted leave I'm cautious re. my mortgage, don't want any nasty 15% rates around the corner when we do leave.

rate is 1.64% variable; overpay each month

personally I'm sticking on my variable which is 2% over BoE but I'm not an IFA and trying to guess what deals are going to be available from Banks/BSocs over medium term is frankly witchcraft.

Good luck whatever you decide

The 1.64% is variable based on the Coventry Building Society SVR. It has only changed once when the rate dropped 0.25% and my rate followed that, obviously there is no guarantee how it will follow in the future. What I have heard from and IfA is that the Coventry have over 60% of their book on the same deal and they wouldn't be able to not be competitive otherwise they would loose business. fortunately there are no redemption fees. They are also ethical so I can hope...

Sounds like it is a job for excel!

I'm intending to remortgage. Currently on 3.5% or so deal from 4 years ago, which I'll have to pay to get out of (still has a year and a bit left to run) but banking on locking into a good deal before rates rise.

Thinking 15% rates are around the corner is about as stupid as voting for Brexit in the first place

Problem with a 10 year fix is how portable it may be if you want to move.

I've just fixed for 2 years but it was simply a product switch so no fee. Fixing for 2 years on a £1000 plus fee might be a bit pointless.
If I was sure we were staying put I'd have probably gone for 5 years fix but the way the country is going I want to leave our options open!

rate is 1.64% variable
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rate is 2.64% fixed for 10 years

First is a good deal while the rates are low.
Second is not a bad deal and potentially a good deal if rates go up.

Indication is that the interest rates are set to rise on the 2nd November (0.25% to 0.5%)

For perspective, the last time the base rate actually went up was back in 2007, when they went from 5.5% to 5.75%

https://www.moneysavingexpert.com/tips/18-10-2017/

Problem with a 10 year fix is how portable it may be if you want to move.

We were recently advised that our [i]"portable"[/i] 6-year fixed mortgage would cost us more to port than just paying the repayment charges and arranging a new one. 😕

Which makes me kinda wonder why we spent ages trying to find a portable mortgage.

winston - Member
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Problem with a 10 year fix is how portable it may be if you want to move.

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Good point, will check.

GrahamS - Member

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For perspective, the last time the base rate actually went up was back in 2007, when they went from 5.5% to 5.75%
..

Indeed, so we're at the bottom and rates could be maintained at much higher levels than now - is how I read this.

When my old fixed rate expired years ago I migrated onto the providers standard variable rate (base + 2%) just as the rates dropped, which was a stroke of luck - been on that up until recently as a couple of 5yr fixed rate deals appeared which worked out £20 per month cheaper, since the hinting that the rates might go up began, i've seen a few lenders adjust their rates accordingly.

Depends on your circumstances really, but I don't know if the current 5yr fixed rates will get any cheaper anytime soon, the 10yr fixed rates are probably a bit cautious on the side of the lender. Some deals start you off on the variable rate with an option to buy back onto the fixed rate if you wanted to.

We've just arranged the mortgage for the new house and decided to stick for 5 years. we've got a bit of renovation to do so wanted a known price for the time we need to do the work.

Interesting thread.

We are on a terrible mortgage at the moment (RBS Offset that works well if you have 70% of the mortgage amount in savings, but if you had that much in savings why would you have a mortgage?) so sitting down with a IFA next week to go through options. My current thinking is to look for a 5 year fixed as I'm pretty risk adverse. We want to extend the house though so need to keep one eye on ease of increasing loan amount in a year or so.

My 2 year fixed with HSBC at 1.89 ends 1st December. Usually do this online, but actually going into the local HSBC on Friday as they called at the right moment. Probably go 2 year fixed, which will be cheaper than what I am on now.

Forgot to add, I have 10 years left, am I best sticking and overpaying when possible. Or reduce the term, ie 9 or 8 years to increase the monthly payment and force my hand to pay off quicker?

My 2 year fixed with HSBC at 1.89 ends 1st December. Usually do this online, but actually going into the local HSBC on Friday as they called at the right moment. Probably go 2 year fixed, which will be cheaper than what I am on now.

But then you'll be re-mortgaging right in the (brown) eye of the brexshit storm when rates will be at 40% and we'll all be fighting to the death over the last tub of hummus in Waitrose 😮

Edit - i'm in a similar boat, 10 years left & took a 5 year fixed - will be making overpayments instead of committing to larger payments/shorter term in the hope that there won't be much left after the end of the fixed term.

J

am I best sticking and overpaying when possible. Or reduce the term, ie 9 or 8 years to increase the monthly payment and force my hand to pay off quicker?

Assuming your lender don't charge for early or over payment then it amounts to the same thing doesn't it?

Personally I prefer to stick with the term and make a monthly overpayment as it gives a bit more flexibility if circumstances change.

In the same boat here, we have decided to go fixed for 5 years at 1.59% with HSBC.
I'm also risk averse so knowing what the payments will be for the next 5 years is pretty important to me.

The government's just announced that five hundred BEEELLION pounds has gone walkabouts from the economy. Even if interest rates go up to counter inflation, I imagine it'll be by a relatively small amount. Having said that I fixed at 1.85% on a five year deal last year so can't really talk.

I think I'll apply for the 10 year while it is still available as I have 3 months where the AIP is valid I think. I can decide later.

I'm going to go for a 5 year fixed myself, 10 year deals are just a bit too steep on the interest rate for my liking. That said if interest rates do go crazy post-Brexit I could end up regretting it. Fact is no one (even financial advisors etc.) have any clue how the economy is going to fare post-Brexit and what affect that will have on interest rates so anything is just a gamble. If you're reasonably optimistic (that everything isn't going to go completely down the toilet) then I wouldn't fix for longer than 5 years, otherwise fix longer.

The 1.64% variable is a bird in the hand.

The 2.64% fixed is two in the the bush. (Possibly not even two birds.)

Following that logic I've always gone with the cheapest rate at the time I'm buying whether fixed or variable and so far (by fluke) I've always come out on top.

Nobody can predict future rates, but the chances are the bloke setting the bank's rates can guess better than you so he's already factored that into both products so they are equivalent deals as far as he knows.

Try Tescos for a quote, they were really cheap a few months back, but aren't on the comparison sites.

Incidently I'm not an expert but if the economy goes wrong then interest rates go down. If the economy goes well interest rates go up as a brake. So if Brexit affects the economy negatively, surely rates will stay low?

So if Brexit affects the economy negatively, surely rates will stay low?

Not if the the negative effect is caused by weak currency.

Fact is no one (even financial advisors etc.) have any clue how the economy is going to fare post-Brexit and what affect that will have on interest rates

True - but the base rate is at 0.25%, so surely it can only really stay the same or rise? And we currently have above-target inflation.

True - but the base rate is at 0.25%, so surely it can only really stay the same or rise? And we currently have above-target inflation.

You'd think, yet the OP's lender doesn't think rates are going up much because they are prepared to bet money that interest rates are going to be, on average, under 2.64 for the next [b]ten[/b] years. Their guess is probably wrong, all predictions of the future are, but they know at least as much about this as we do so hard to see how STW's guess would be better.

I'd regard the potential benefit of the 2.64% as jam tomorrow and be cashing in on the certain benefit of 1.64% today.

they know at least as much about this as we do so hard to see how STW's guess would be better.

I'm not saying our guess is better, I'm saying we don't know so weigh up the benefits of either outcome and how you feel about the risk.

Seems to me the rates are not going to get any [i]lower[/i] and there seems an uncertain but pretty reasonable chance they will go higher.

Fixing at 2.64% (which not so very long ago would have been an amazing rate) gives some certainty at the possible unnecessary expense of 1% [i]if[/i] the rates stay the same for ten years.

On the other hand 1.64% variable gives you the best rate now, betting that the rates won't rise more than 1%.

I'm fairly risk-averse, so I'd prefer the former (I fixed at 2.49% for 6 years) but everyone's situation is different.

FWIW, I bitterly regret my decision to fix for 5 years in 2014. I wanted some certainty post-divorce, indie financial adviser got me 4.5%, which seems to be at least twice what anybody else is paying! That decision has cost thousands, and resulted in me being in the weird situation of having a MINIMUM value of house I can buy due to loan-to-value ratio.
It’s got a £8k release clause too, so I can’t just get rid. Just under 2 years to go, yes that means I’m spat out 6 months after Brexit!

Seems to me the rates are not going to get any lower and there seems an uncertain but pretty reasonable chance they will go higher

FWIW, I bitterly regret my decision to fix for 5 years in 2014. I wanted some certainty post-divorce, indie financial adviser got me 4.5%, which seems to be at least twice what anybody else is paying!

if it's any consolation, I'm fixed at 3.1% until July 2025...

moderately regretting that one now. Not bitterly. Yet... 😆

the weird situation of having a MINIMUM value of house I can buy due to loan-to-value ratio.

Interesting you should post this now. I just googled ten year fixes and it's occured to me that when you get into long fixes there's another way the lender makes money. In theory you can transfer the mortgage - if you fail to meet the lenders criteria if you move you can't and then you have to pay the early repayment fee. So the interest rate can be very cheap and they plan to make up the shortfall by stiffing the customer later.

If that theory's true it makes long fixes likely to be a very good value if you're certain you're staying put for the whole term.

That's what I was advised 3 years ago, and I suspect airtragic too. Not saying it isn't true now but people have been saying that for at least 5 years, probably longer.

Me too. Since 2004 when I first bought everyone has been agreed rates are going to stay the same or go up and fixed rates are a bargain. So far 2-3 year variables have always been cheapest and I've always gone for them. By chance that has meant I've always won.

Funnily enough a couple of months ago for the first time ever a 2 year fix with no costs at 1.5pc was cheaper than any variable I could find so I went with that.

oob: yeah you have a point about the long fixes. As I mentioned on another thread, our 6 year fix was sourced from a Mortgage Broker under explicit instruction that we wanted a portable mortgage as we were likely to move within the six years. Now we're told that porting the mortgage will cost us 7 grand and we'd be better off just paying early and arranging a new one. Not quite sure how that meets the "portable" criteria!

Having said that, doing lots of short term mortgages instead also stings you because although you may get better rates, you also have to pay multiple sets of arranging fees which could offset some of that saving.

Having said that, doing lots of short term mortgages instead also stings you because although you may get better rates, you also have to pay multiple sets of arranging fees which could offset some of that saving.

I've remortgaged every two or three years since 2004 and I've never paid any fee of any kind except once when I forgot to tick the 'don't sell me a copy of the deeds for £30' box with the solicitor the lender provided. I find if I pick products with fees then the comparison calculation gets really difficult, easier to just to rule them out so all you have to compare is the rate. (Mind you, I am obviously paying those fees - they're just included in the interest rate.)

Of course with short deals you *do* end up having the hassle of researching/arranging a new mortgaging frequently & that time and stress has a value. Nothing's free. The savings are enough to put up with that at the moment but as the loan reduces that will change.

Way back in 2006 I was offered 0.49% tracker above the base rate for the life of the mortgage. Even if rates start going up now I think I will still be better off for a good while. Also, saved a load of time and stress in the last 11 years.

I know someone that was on a tracker [i]below[/i] base rate that they'd had for years as a staff perk from a bank they worked at.

Apparently the terms of that deal were closely scrutinised and revised when the rates fell so low. For some reason the bank wasn't very keen on a mortgage with a negative interest rate 😀

nickjb - Member
When I went through this about 8 years ago I was told rates were so low they can only go up so I fixed. Then they went down. 5 years later, same again, only this time they were not only so low they can only go up but they are just about to go up. Another fixed mortgage, another 3 years of rates staying low. In your situation I'd stay on the low variable rate, but I've been wrong every time so maybe go fixed

Just wanted you to know you're not the only mug in town!!

Ours is due for a tweak in July 18. Been on 2 fixed programs and will probably fix again when the time comes. Nationwide are willing to open negotiations in April but if I pull current deal early then we have to buy ourselves out which is fair enough.

Got a <40% ltv just now which will be a shade better when we get to July so probably fix again then for 5 years if I can.

El wifo stopped working after wee one was born 3 years ago and won't be going back for a while. Might as well get the mortgage dealt with instead of nursery fees I guess.

Got 159k outstanding on about 2.99% I think it is.

Might as well get the mortgage dealt with instead of nursery fees I guess.

You're probably aware but just in case: you get 15 hours a week free for kids aged 3 or 4.

https://www.gov.uk/help-with-childcare-costs/free-childcare-and-education-for-2-to-4-year-olds

Yeah thanks Graeme, wee one starts in Jan at nursery for afternoons.