Mortgage - 1.99% For 5 Years or 2.89% for 10?

Mortgage - 1.99% For 5 Years or 2.89% for 10?

Author
Discussion

pushthebutton

Original Poster:

1,096 posts

181 months

Saturday 18th April 2015
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Those are my options.

I just about remember the very high rates of the 1980s. I'm leaning towards the 10 year fix for stability, but if HSBC see fit to offer a 1.99% fix for 5 years they must be pretty confident about the direction of the base rate over the next 5 years?

My repayments are affordable on both, but I would pay a lot less interest over the 5 year fix so it really comes down to what rates will do from years 5 to 10 doesn't it?

Any help much appreciated.

HarryW

15,150 posts

268 months

Saturday 18th April 2015
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Tbh if it was me I'd go for the 10 year at that rate, but we are all different as are our needs and wants......


Edited to add, I was a mortgage borrower during the 80's and the thought of repeating having to go around the supermarket counting every penny when you had 2 young children at home being looked after by my 'stay at home' wife and not earning. Also if I recall the married mans tax allowance was removed, stressful times to say the least.
It is not something I would like to repeat or wish upon anyone....

Edited by HarryW on Saturday 18th April 19:38

HonestIago

1,719 posts

185 months

Saturday 18th April 2015
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I'd take the 5 year one. Low interest rates are here to stay IMO.

Simpo Two

85,147 posts

264 months

Saturday 18th April 2015
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5 here too. They know more than you do, so if they make you an offer it's because they think they will win - and I wouldn't be surprised if in a few years interest is negative, whatever the connotations of that are. Keep your options open.

pushthebutton

Original Poster:

1,096 posts

181 months

Saturday 18th April 2015
quotequote all
Thanks for the replies so far.

I've considered the 5 year, but over paying as if it were the 10 year rate so that I build up a buffer. I'm pondering whether a change of Govt may affect interest rates over the next few years (incoming!!).

Welshbeef

49,633 posts

197 months

Saturday 18th April 2015
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Calculate the sums for the debt you have over the timescales - have to say the 10 year looks great only thing with HSBC is the amount they lend you is stupidly low if you have dependants.


I went for a remortgage quote from them recently and they only offered to lend my 1/3rd of my prevailing debt as computer said no.... Bizarre. So it might be a rate purely for attention rather than actually accessability

jontymo

810 posts

149 months

Sunday 19th April 2015
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if you can wait until election then do, otherwise its a view on the outcome - cons 5years, lab 10years. current economy outcome good, change of gov who knows.

jontymo

810 posts

149 months

Sunday 19th April 2015
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if you can wait until election then do, otherwise its a view on the outcome - cons 5years, lab 10years. current economy outcome good, change of gov who knows.

Craikeybaby

10,369 posts

224 months

Monday 20th April 2015
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What are the penalties for getting out early? A lot of things can change in 10 years.

Craikeybaby

10,369 posts

224 months

Monday 20th April 2015
quotequote all
What are the penalties for getting out early? A lot of things can change in 10 years.

minimods

135 posts

238 months

Monday 20th April 2015
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Is there an echo in here? biggrin

I think 10 years is an awfully long time for a mortgage. Look at the redemption charge if you want to change it later, for example if you move abroad or come into a lump sum and want to pay it off. I would probably go for the 5 year and pay the same as the 10 year in overpayments. Interest rates will probably rise in 5 years but who knows?

Welshbeef

49,633 posts

197 months

Monday 20th April 2015
quotequote all
minimods said:
Is there an echo in here? biggrin

I think 10 years is an awfully long time for a mortgage. Look at the redemption charge if you want to change it later, for example if you move abroad or come into a lump sum and want to pay it off. I would probably go for the 5 year and pay the same as the 10 year in overpayments. Interest rates will probably rise in 5 years but who knows?
The move overseas sure that's maybe am issue but if you came into some money you'd do the maths cost to pay off early v internet you'd earn on the lump sum. End of the day you can simply let it run if you wish.

Question is for 10years it's a fixed low apr. could you get it less? Maybe but how much less

FredClogs

14,041 posts

160 months

Monday 20th April 2015
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Take the 10.

Craikeybaby

10,369 posts

224 months

Monday 20th April 2015
quotequote all
minimods said:
Is there an echo in here? biggrin

I think 10 years is an awfully long time for a mortgage. Look at the redemption charge if you want to change it later, for example if you move abroad or come into a lump sum and want to pay it off. I would probably go for the 5 year and pay the same as the 10 year in overpayments. Interest rates will probably rise in 5 years but who knows?
Damn iPhone double posting. I can't delete it now either.

I share your views, but I've never lived anywhere for more than 5 years, so would be keen on locking myself down for 10 years.

Welshbeef

49,633 posts

197 months

Monday 20th April 2015
quotequote all
Craikeybaby said:
minimods said:
Is there an echo in here? biggrin

I think 10 years is an awfully long time for a mortgage. Look at the redemption charge if you want to change it later, for example if you move abroad or come into a lump sum and want to pay it off. I would probably go for the 5 year and pay the same as the 10 year in overpayments. Interest rates will probably rise in 5 years but who knows?
Damn iPhone double posting. I can't delete it now either.

I share your views, but I've never lived anywhere for more than 5 years, so would be keen on locking myself down for 10 years.
Mortgage is portable so don't see what the issue is.

SunsetZed

2,236 posts

169 months

Tuesday 21st April 2015
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Welshbeef said:
Craikeybaby said:
minimods said:
Is there an echo in here? biggrin

I think 10 years is an awfully long time for a mortgage. Look at the redemption charge if you want to change it later, for example if you move abroad or come into a lump sum and want to pay it off. I would probably go for the 5 year and pay the same as the 10 year in overpayments. Interest rates will probably rise in 5 years but who knows?
Damn iPhone double posting. I can't delete it now either.

I share your views, but I've never lived anywhere for more than 5 years, so would be keen on locking myself down for 10 years.
Mortgage is portable so don't see what the issue is.
The fact that they may not lend as much as another lender which may prevent the OP from moving to the desired property, particularly if dependants end up involved. If the Op's comfortable in their current property and has no desire to move then the 10 year makes sense but if there are any doubts I'd take the 5 year.

JB!

5,254 posts

179 months

Tuesday 21st April 2015
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Do the maths, but 0.89% for 10 years of fixed payment seems a damn good deal, especially if you are in a position to overpay.

eps

6,272 posts

268 months

Tuesday 21st April 2015
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What is the rate once the 5 year ends? Of course you can go elsewhere, but that's the one you'd be offered by HSBC. I think it's 1.5 over base rate at the moment.

If it were me I'd take the 10 and overpay the 20% that you can. Actually either way I'd sign up and overpay by 20%.. Less pain when you drop out of the fixed rate, whatever happens to the base rate.

Sarnie

8,025 posts

208 months

Tuesday 21st April 2015
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We did a ten year deal for a client this week at 3.19% but the penalties actually end after five years so he can redeem it penalty free after five years but still benefit from the fixed rate for the full ten years smile

pushthebutton

Original Poster:

1,096 posts

181 months

Tuesday 21st April 2015
quotequote all
I'm pretty sure that the mortgage is portable, but I'll confirm later today. I've moved a fair bit in the past and it was all with the aim to eventually get where I want to be. I've achieved that now and, although I'd never rule out another house move over the mortgage period, it isn't the plan at the moment.

The lender, First Direct, have been pretty thorough with my outgoings, but at the moment the amount they've agreed to lend is within £20k of my top budget. Hopefully that will increase to roughly match it with further clarification of the 'fixed' elements of my pay.

I really like the idea of knowing my mortgage payments over the next 10 years, especially with a fixed rate of 2.89%, but 1.99% over 5 years isn't easy to dismiss. I'm leaning towards the 10 year deal as it's more of a known known whereas the 5 year deal has an element of the known unknown.