First time buyer - mortgage advice

[MX5_Nuts]

Me and the misses will be applying for our first mortgage in around 2 months time. We have decided we want a fixed rate for either 5 or 10 years for piece of mind with the fixed monthly payments. However, what I'm struggling with is how long to fix? The current base rate is at a very low 0.5% which surely means its likely to go up in the near future resulting in a price soar when renewing?

5 year fixed initial rate is 2.89% and 10 year fixed is 3.74% which works out to around £68 per month (Nationwide).

Pay an extra £68 per month for an extra 5 years or take a chance the rates won't go up after 5 years and save £68 per month?!

What would you do in this position? Any advice would be appreciated

[Sarnie]

I would never advise any FTB's to be taking 10 year fixed rates.............so much can change in ten years.........marriage, kids, change of jobs, family issues, health issues, relationship breakdowns, changes to lending criteria, house price fluctuations.........ten years is such a long time to commit to any lender or rate when if any of the above happen and you have to redeem the mortgage there will be thousands to pay in Early Repayment Charges.........

[MX5_Nuts]

Ah yes those are all very good points! Need to do some more reading up..

Thanks

[Rowley92]

Just to echo the above from a FTB point of view (1.5 years into new home). We opted for a 2 year fixed deal on our flat however our neighbours have been nothing but trouble since moving in. Thankfully our mortgage is only a 2 year deal and we can sell up come July (unless we see a house and can move mortgage over). Our fees were 3% of the outstanding mortgage balance (early repayment charges) if we sold up before the deal ended. I can't imagine being tied up for a longer period of time!!

If it was me I would find a suitable 2-3 year fixed deal and if everything is good at conclusion of said deal then tie yourself in for a longer period of time. You might lose out short term but if anything changes in your lifestyle you have greater flexibility to move etc.

[MX5_Nuts]

Rowley92 said:

Just to echo the above from a FTB point of view (1.5 years into new home). We opted for a 2 year fixed deal on our flat however our neighbours have been nothing but trouble since moving in. Thankfully our mortgage is only a 2 year deal and we can sell up come July (unless we see a house and can move mortgage over). Our fees were 3% of the outstanding mortgage balance (early repayment charges) if we sold up before the deal ended. I can't imagine being tied up for a longer period of time!!

If it was me I would find a suitable 2-3 year fixed deal and if everything is good at conclusion of said deal then tie yourself in for a longer period of time. You might lose out short term but if anything changes in your lifestyle you have greater flexibility to move etc.

Thanks for the info. That's one thing I'm absolutely dreading is the possibility of having nightmare neighbours and it's something I didn't consider. We're hoping to find a semi-detached house which minimises neighbour problems but there's always a risk!

Will probably end up going for a 3 year fixed after doing more research.

[p1doc]

Sarnie said:

I would never advise any FTB's to be taking 10 year fixed rates.............so much can change in ten years.........marriage, kids, change of jobs, family issues, health issues, relationship breakdowns, changes to lending criteria, house price fluctuations.........ten years is such a long time to commit to any lender or rate when if any of the above happen and you have to redeem the mortgage there will be thousands to pay in Early Repayment Charges.........

totally agree with sarnie-I have been stuck on high interest rate mortgage for 10yrs due to long term fix and cannot change until end of fix next aug due to high EPC,in retrospect 5year fix maximum

[jonwm]

I first had a mortgage in 2004, have changed every 2 years since, every time and I mean every time I ask "are the rates likely to rise, should I fix for longer blah blah" I never have and every time he says no one really has an idea when they will rise if at all.

I'm for the first time over paying to reduce the years, wife wanted to move earlier this year with a help to buy scheme to a huge 4 bed home, way over our price range but the low rates made it affordable, (plus lending £60k for 5 years of government) I felt the lower rates were not be forever so have decided to stick now in my older 3 bed (which is big enough anyway).

No use to you really but I would fix for less, 10 years is way too long IMHO.

Just got me thinking in 10 years I've:
Moved house
Got married
Had 2 kids
Had 1 dog, Lost 1 Dog
Moved several times within my organisation
Earn nearly twice as much
Wife now earns hardly anything
Now pay £600 more a month on my mortgage
Changed company car 4 times, wifes car 3 times

As above, lots change :-)

[bobclayton]

I'm a Financial Advisor with whole of market mortgage access - let me know if I can help! Send me a PM.

[MX5_Nuts]

Thanks for all the help - definitely only going to fix for 2-3 years now after giving it some serious thought!

[Sarnie]

MX5_Nuts said:

Thanks for all the help - definitely only going to fix for 2-3 years now after giving it some serious thought!