Mortgage interest rates

[iacabu]

This is a simple question but I'd rather costs be lower when moving into my first house, I don't want to regret it should I find rates increasing once or twice a year over those 2 years.

Would you fix for 2 years at 2.28%, or 5 years at 2.59%

[PixelpeepS3]

that seems high... we just remortgaged and pulled some cash out @ 1.57 with nationwide fixed for 2 years

[bunchofkeys]

I'm guessing that LTV makes a difference in % amount?

[sidicks]

iacabu said:

This is a simple question but I'd rather costs be lower when moving into my first house, I don't want to regret it should I find rates increasing once or twice a year over those 2 years.

Would you fix for 2 years at 2.28%, or 5 years at 2.59%

Me personally? 5 years at 2.59%

In doing so you might be slightly worse off based on the expected path of rate rises over the 5 year period, but you are protected against the unexpected tail risks.

I’d rather pay a bit extra for that certainty. Other people might quite reasonably take a different view!

[WhiskyDisco]

I've just fixed for 5 years at 2.34% with the Halifax.

A couple of considerations:
- redemption penalty --> are you committed to holding a mortgage for 5 years? Will the lender let you take the rate to a new mortgage?
- remortgaging --> when do you want to go through the process again, in terms of job/rate, fee and likely base rate?

[The Selfish Gene]

2 years is slap in middle of Brexit isn't it? (not that I want to even mention Brexit) but

I just fixed (November last year) for 5 years at 1.7% for a couple of reasons.

One, the unknown that is Brexit, and although I'm sure nothing weird will happen it's nice to cover ones arse.

Two, I'm sick of all the hassle of re-financing mortages every two years. The difference in the saving over the 2 year deal wasn't worth my effort in 2 years doing it all again.

I'd have fixed for 20 years if they let me!

[Sarnie]

iacabu said:

This is a simple question but I'd rather costs be lower when moving into my first house, I don't want to regret it should I find rates increasing once or twice a year over those 2 years.

Would you fix for 2 years at 2.28%, or 5 years at 2.59%

90% LTV I'm guessing.....

[trickywoo]

Don't underestimate the pain and cost of remortgaging.

If you went two year fix the standard variable rate you will likely be on after with the same lender will be poor, and there will be costs to change lenders.

For such a small difference and with everything else going on I'd go five.

[egor110]

5 year fix.

Brexit is close by and who knows what the fks going to happen then .

[Teebs]

I've been offered the below by Santander, my current provider

2 year 1.69% - £999 fee

3 year 2.19% - £0 fee

5 year 2.29% -£0 fee

The 5 year is only a difference in repayments of £7/month, surely worth it for piece of mind given current and future woes....?

[iacabu]

Thanks for the replies. Most of you seem to be backing my gut feeling for a 5 year fix. The difference would be £25 per month extra over the 2 years.

The interest rate is actually better than I hoped for due to having a fairly poor credit history (all negatives over 3 years old and zero debt).

It's 85% LTV.

I expect I'll be able to get a better rate after 2 years as certain things on my credit file will be either removed or older and my score should improve with the mortgage payments being paid on time. However, with that said, rates could have increase once or twice a year for the next two years and I won't be able to get a better rate than 2.59%

Edited by iacabu on Friday 31st August 16:25

[BoRED S2upid]

trickywoo said:

Don't underestimate the pain and cost of remortgaging.

.

Pain and cost? Give your mortgage advisor a few bank statements and pay slips and wait. Sign a piece of paper and job done. Once every 2, 5 or 10 years I wouldn’t call it painful or costly.

[whatleytom]

I work for a small ish bank. Our internal forecast is for base rate to be 1.00%/1.25% by the end of 2023. In my own opinion given Brexit etc I can't imagine it getting above 1.00%, more likely probably back to 0.50%. If it were me I don't see huge value in fixing beyond 2/3yrs, by which point mortgages are likely to be in a similar position given the way the housing market, particularly in the south appears to be going. Perhaps at that point it may be worth fixing for a longer period if things are looking slightly more favourable from an economic perspective.

[trickywoo]

BoRED S2upid said:

Pain and cost? Give your mortgage advisor a few bank statements and pay slips and wait. Sign a piece of paper and job done. Once every 2, 5 or 10 years I wouldn’t call it painful or costly.

Maybe just me as I’m a powerfully built director and had to provide all kinds of information but it took HSBS via London and country six months and £700+ to do mine which was for half of the maximum mortgage amount they offered.

I certainly wouldn’t want to do that every two years.

[Edible Roadkill]

I fixed mine for 5yr's almost a year ago.

1.89% instead of a 1.69% 2yr offering.

There's already been 2x 0.25% increases to base rate since then, possibly more to come and if id went 2yrs I'd be looking for another fixed deal during a time of uncertainty.

[rsbmw]

iacabu said:

Thanks for the replies. Most of you seem to be backing my gut feeling for a 5 year fix. The difference would be £25 per month extra over the 2 years.

The interest rate is actually better than I hoped for due to having a fairly poor credit history (all negatives over 3 years old and zero debt).

It's 85% LTV.

I expect I'll be able to get a better rate after 2 years as certain things on my credit file will be either removed or older and my score should improve with the mortgage payments being paid on time. However, with that said, rates could have increase once or twice a year for the next two years and I won't be able to get a better rate than 2.59%

Edited by iacabu on Friday 31st August 16:25

At 85% you can do better than 2.59% for 5 years. Speak to Sarnie

[iacabu]

rsbmw said:

At 85% you can do better than 2.59% for 5 years. Speak to Sarnie

My mortgage advisor has looked across the market and the lenders who were willing to lend to me with certain marks on my file and with a few issues with the girlfriends payslips came back at the rates mentioned. Not sure what else could be done

[Sarnie]

iacabu said:

My mortgage advisor has looked across the market and the lenders who were willing to lend to me with certain marks on my file and with a few issues with the girlfriends payslips came back at the rates mentioned. Not sure what else could be done

Who is the lender?

[iacabu]

Originally it was Accord but due to having recently cleared some debt that is now updated on my file, Halifax are also willing to offer. These are the best offers coming in for me I'm told

Edited by iacabu on Saturday 1st September 10:00

[xyz123]

Are both products with same fee?

If you say the difference between two is £25 a month, that means in 2 year you will save £600. Only you can judge if you can remortgage for £600 in two years (product fee, any valuation fee, legal fees, broker fee (not all will be applicable of course).).. I would say 5 years is better...