5% Interest Rate - Would you cope?
Discussion
Looking to move to a new house shortly and get a fixed rate for 5 years. Its all a bit scary though as I'm 2 years from being mortgage free.
Just going through the figures, and the new mortgage comes out at about 26% of our joint income, which means we can overpay each month as we have no other debt, however I'm still worried.
If at the end of the term, interest rates were at their average over the last couple of decades (5%), how would you cope? On a £150k mortgage, this would equate to roughly an extra £400pm. This would take us up to 36% of combined income, manageable, but things would have to change.
Just going through the figures, and the new mortgage comes out at about 26% of our joint income, which means we can overpay each month as we have no other debt, however I'm still worried.
If at the end of the term, interest rates were at their average over the last couple of decades (5%), how would you cope? On a £150k mortgage, this would equate to roughly an extra £400pm. This would take us up to 36% of combined income, manageable, but things would have to change.
Why are you getting a 5 year fixed if you're only 2 years away from then end of your mortgage.
If the rate has gone up 5% when you come off the 5 year fixed deal what does it matter because you finished the mortgage 3 years ago?
Get the cheapest 2 year fixed deal you can and over pay if you only have 2 years left. Im confused
Or dont move. Every mortgage is like this, its normally 25 years of 6 figure debt. Personally I over pay by 50 percent rather than spend that money on a bigger house or mortgage. Ill pay it off quicker and if the interest rate does go up Ill just lower my overpayment if I cant afford it. You can do the same, over pay by x% now so if when you do come off the fixed rate, the interest rates have gone up, just dont over pay so much. Just get use to having more go out each month now.
If the rate has gone up 5% when you come off the 5 year fixed deal what does it matter because you finished the mortgage 3 years ago?
Get the cheapest 2 year fixed deal you can and over pay if you only have 2 years left. Im confused
Or dont move. Every mortgage is like this, its normally 25 years of 6 figure debt. Personally I over pay by 50 percent rather than spend that money on a bigger house or mortgage. Ill pay it off quicker and if the interest rate does go up Ill just lower my overpayment if I cant afford it. You can do the same, over pay by x% now so if when you do come off the fixed rate, the interest rates have gone up, just dont over pay so much. Just get use to having more go out each month now.
Edited by oldaudi on Tuesday 3rd November 15:04
Our payment would go up by about £400pm too. Would reduce our "spare" monthly cash by about a quarter so I imagine we'd be going on slightly less holidays but think we'd cope. Obviously have to bear in mind if you go for a 5 year fix you'll hopefully have 5 years of pay rises before coming off the fix so won't be quite as bad.
Depends if you mean 5% rate on my mortgage or 5% hike on what it currently is...
5% rate on my mortgage would only be another £200 so could cope with that fairly easily. A 5% hike would be an extra £500 per month which would be do-able but would definitely need some belt-tightening and maybe even down-grading of the car.
Haven't really thought about this before so it's actually quite comforting to know that I wouldn't totally be wiped out!
5% rate on my mortgage would only be another £200 so could cope with that fairly easily. A 5% hike would be an extra £500 per month which would be do-able but would definitely need some belt-tightening and maybe even down-grading of the car.
Haven't really thought about this before so it's actually quite comforting to know that I wouldn't totally be wiped out!
oldaudi said:
Why are you getting a 5 year fixed if you're only 2 years away from then end of your mortgage.
If the rate has gone up 5% when you come off the 5 year fixed deal what does it matter because you finished the mortgage 3 years ago?
Get the cheapest 2 year fixed deal you can and over pay if you only have 2 years left. Im confused
Or dont move. Every mortgage is like this, its normally 25 years of 6 figure debt. Personally I over pay by 50 percent rather than spend that money on a bigger house or mortgage. Ill pay it off quicker and if the interest rate does go up Ill just lower my overpayment if I cant afford it. You can do the same, over pay by x% now so if when you do come off the fixed rate, the interest rates have gone up, just dont over pay so much. Just get use to having more go out each month now.
No, we have two years on our current mortgage in total, then the balance is zero. The 5 year fixed would be for a new mortgage starting from scratch for a bigger home.If the rate has gone up 5% when you come off the 5 year fixed deal what does it matter because you finished the mortgage 3 years ago?
Get the cheapest 2 year fixed deal you can and over pay if you only have 2 years left. Im confused
Or dont move. Every mortgage is like this, its normally 25 years of 6 figure debt. Personally I over pay by 50 percent rather than spend that money on a bigger house or mortgage. Ill pay it off quicker and if the interest rate does go up Ill just lower my overpayment if I cant afford it. You can do the same, over pay by x% now so if when you do come off the fixed rate, the interest rates have gone up, just dont over pay so much. Just get use to having more go out each month now.
Edited by oldaudi on Tuesday 3rd November 15:04
Simpo Two said:
Ptooey, my generation came through the 15% years... you lot don't know you're born 
But our houses went up in value 10000000000000000000000% or a figure close to that which many of us can now downsize from to the other house in the country which we bought when interest rates went down to "free please take some money" levels. Letting us retire before reaching 60 years of age. Unlike the youth of today, who will still be working in their coffins or they would be if they ever manage to get a job as they are unemployable due to an education system which conned them into believing their degree was worth something, when in reality they wouldn't be able to pass a 1960s 11+ .
Some of those figures may be out a little but not much.
Yes, we had the winter of discontent, the IRA, countless feckless Governments, Jimmy Savile and the Austin Maestro but give me 15% interest rates and the easy life we've had so far than the s
t storm we've passed onto our poor offspring. Pistom said:
But our houses went up in value 10000000000000000000000% or a figure close to that which many of us can now downsize from to the other house in the country which we bought when interest rates went down to "free please take some money" levels. Letting us retire before reaching 60 years of age.
Unlike the youth of today, who will still be working in their coffins or they would be if they ever manage to get a job as they are unemployable due to an education system which conned them into believing their degree was worth something, when in reality they wouldn't be able to pass a 1960s 11+ .
Some of those figures may be out a little but not much.
Yes, we had the winter of discontent, the IRA, countless feckless Governments, Jimmy Savile and the Austin Maestro but give me 15% interest rates and the easy life we've had so far than the st storm we've passed onto our poor offspring.
Well said Unlike the youth of today, who will still be working in their coffins or they would be if they ever manage to get a job as they are unemployable due to an education system which conned them into believing their degree was worth something, when in reality they wouldn't be able to pass a 1960s 11+ .
Some of those figures may be out a little but not much.
Yes, we had the winter of discontent, the IRA, countless feckless Governments, Jimmy Savile and the Austin Maestro but give me 15% interest rates and the easy life we've had so far than the s
t storm we've passed onto our poor offspring. 
(coming from a youth of today)I'm just getting my first mortgage now. If rates went up 5% we would cope but we would have no life whatsoever!
Pistom said:
But our houses went up in value 10000000000000000000000% or a figure close to that which many of us can now downsize from to the other house in the country which we bought when interest rates went down to "free please take some money" levels. Letting us retire before reaching 60 years of age.
Unlike the youth of today, who will still be working in their coffins or they would be if they ever manage to get a job as they are unemployable due to an education system which conned them into believing their degree was worth something, when in reality they wouldn't be able to pass a 1960s 11+ .
Some of those figures may be out a little but not much.
Yes, we had the winter of discontent, the IRA, countless feckless Governments, Jimmy Savile and the Austin Maestro but give me 15% interest rates and the easy life we've had so far than the st storm we've passed onto our poor offspring.
You forgot final salary pensions, the Austin Allegro and the Bay City Rollers.Unlike the youth of today, who will still be working in their coffins or they would be if they ever manage to get a job as they are unemployable due to an education system which conned them into believing their degree was worth something, when in reality they wouldn't be able to pass a 1960s 11+ .
Some of those figures may be out a little but not much.
Yes, we had the winter of discontent, the IRA, countless feckless Governments, Jimmy Savile and the Austin Maestro but give me 15% interest rates and the easy life we've had so far than the s
t storm we've passed onto our poor offspring. eldar said:
Simpo Two said:
Ptooey, my generation came through the 15% years... you lot don't know you're born
17% at one point. That was fun, how we all laughed....So the answer to the original question; yes, no problem, I was paying 6.5% when I bought the last house in 2007, I left the payment the same as its gone down to 2.5% for the last few years ....
anonymous said:
[redacted]
Exactly - I bought in the mid-80's after dumping our first house which was a poor buy. I don't recall any great hardship. I had a decent job but wife didn't work as we had little 'uns. Even bought her a new Polo (very posh then) a few months before we bought the house.oop north said:
eldar said:
Simpo Two said:
Ptooey, my generation came through the 15% years... you lot don't know you're born
17% at one point. That was fun, how we all laughed....eldar said:
You forgot final salary pensions, the Austin Allegro and the Bay City Rollers.
Yeah, final salary pensions... Yep for a while it was tough back then I hear, but I think that generation were far luckier overall than where we are now.Still, a £1000 a month mortgage would turn into £2200pm if those rates ever returned....Scary, must've been absolutely dreadful.
Bugger it, I'm seriously considering getting on the phone tomorrow and calling it off, staying put here and paying the mortgage left off over the next 8 months. The house is OK, detached, 3 bed in a quiet cul-de-sac, its not a nice stone cottage with a big garden and views, but its not 20 years of debt either.
RowntreesCabana said:
Yeah, final salary pensions... Yep for a while it was tough back then I hear, but I think that generation were far luckier overall than where we are now.
Still, a £1000 a month mortgage would turn into £2200pm if those rates ever returned....Scary, must've been absolutely dreadful.
Bugger it, I'm seriously considering getting on the phone tomorrow and calling it off, staying put here and paying the mortgage left off over the next 8 months. The house is OK, detached, 3 bed in a quiet cul-de-sac, its not a nice stone cottage with a big garden and views, but its not 20 years of debt either.
I was in same position in 2011, mortgage would of been cleared by today and had no intention of moving - then one day I was looking at the "dream house" and started getting the calculator out, realised I could afford it and now living in a decent sized self build (after the original dream house fell through).Still, a £1000 a month mortgage would turn into £2200pm if those rates ever returned....Scary, must've been absolutely dreadful.
Bugger it, I'm seriously considering getting on the phone tomorrow and calling it off, staying put here and paying the mortgage left off over the next 8 months. The house is OK, detached, 3 bed in a quiet cul-de-sac, its not a nice stone cottage with a big garden and views, but its not 20 years of debt either.
Now mortgaged for a long time - but with enough equity in the new place to down size to something detached and be mortgage free again. So best of both worlds I guess.
bogie said:
eldar said:
Simpo Two said:
Ptooey, my generation came through the 15% years... you lot don't know you're born
17% at one point. That was fun, how we all laughed....We would be hit reasonably hard as we've just taken on a massive (4 times) increase in our mortgage to buy "the dream house".
Would it skint us? Yes it would.
Does my wife need fancy handbags, shoes and designer jewellery? No.
Do I need fancy sportscars and trips to the nürburgring? No.
I remember no holidays abroad when I was little and my parents scrimping and saving, if we can't do the food shop at Marks and Spencer's for a few years I'm sure it'll just build character!
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