Does a 10 year fixed rate mortgage now make sense?
Discussion
We are just doing the research before our deal ends in October and currently am going to a 5 year fixed rate mortgage but having read a few articles on line about mortgages, Brexit, etc a 10 year could be worth considering couldn't it? Two years ago there were 8 deals around now its over 100!
We are in our forever home, early forties, no more kids etc so it seems plausible to look at it I would have thought.
They cant get any cheaper can they?
Downside is if job changed, redundancy, or divorce etc happened the penalty would be big in the 10 year period but if it didn't happen then it could be a good move.
Crystal ball time I know but should I consider it or play it safe with 5 years?
We are in our forever home, early forties, no more kids etc so it seems plausible to look at it I would have thought.
They cant get any cheaper can they?
Downside is if job changed, redundancy, or divorce etc happened the penalty would be big in the 10 year period but if it didn't happen then it could be a good move.
Crystal ball time I know but should I consider it or play it safe with 5 years?
Yes,as the trend in interest rates are not going any were or even down for the forseable future,i would go for a life time tracker mortgage by doing that you don,t have to keep on going back to the mortgage company and setting up a new mortgage every 2-5-or 10 years at more exspence thats what i did.
interstellar said:
Downside is if job changed, redundancy, or divorce etc happened the penalty would be big in the 10 year period but if it didn't happen then it could be a good move.
In 15 years, I think we've done about 4 or 5 ten year fixed rates for our clients. But we have probably remortgaged a few dozen off them due to a change in circumstances or requirements as per the above.However, you can mitigate the risk somewhat.......the Early Repayment Charges with some lenders is 6% of the balance for the full ten years, with Santander for example, but there are some lenders where the ERC drops down and some where it drops to 1% in the last five years......I suppose it just depends on how real the threat of having to redeem it is......
I can't imagine how they can get cheaper.
HSBC just launched a 5 year fix at 1.69%! Could be worth doing this then seeing what things are like after?
http://www.telegraph.co.uk/personal-banking/mortga...
HSBC just launched a 5 year fix at 1.69%! Could be worth doing this then seeing what things are like after?
http://www.telegraph.co.uk/personal-banking/mortga...
The two variables that I would look at would firstly be your financial liquidity, i.e. your ability to not end up in a position where a ten year contract might be restrictive. Good savings and investment levels, low LTV and home for life would push me towards a 10 year.
Secondly, the size of the loan. All these s
tty rollover fees that the industry now actively encourages add up significantly over the lifetime of a mortgage. Someone living on 2 years fixes will probably pay 15 big fees over their lifetime. Paying £1000 every couple of years on a £1m loan is fine but I believe the average U.K. mortgage is under £100k so punters are forking out an extra >1% every time they rollover!!!!! And that doesn't account for the wheeze of valuation fees if you want to change lender. Those seem to be around £1000 for some minimum wage Jub to spend 5 minutes on Google.
In short, the industry has moved very rapidly to a fee generation model from an income gen and actively incentivises short term contracts so as to facilitate enormous rollover charges.
So, if your debt is down towards the level where the fees for rolling over become significant percentages of your lifetime costs then that would steer me towards a ten year interest if the rates stacked up.
10 v 5? At the moment that's a really hard call. My gut feeling on 5 year deals is that this takes us to 2022/3 and that's probably about the time that any big ramifications of Brexit will be coming through. That could mean that you are remortgaging at a slighltly lower rate (base can't go significantly lower) or at a massively higher rate as base rates could be up as could market uncertainty. So if the rates were comparable I personally wouldn't give a 5 year a look in over a ten.
Secondly, the size of the loan. All these s
tty rollover fees that the industry now actively encourages add up significantly over the lifetime of a mortgage. Someone living on 2 years fixes will probably pay 15 big fees over their lifetime. Paying £1000 every couple of years on a £1m loan is fine but I believe the average U.K. mortgage is under £100k so punters are forking out an extra >1% every time they rollover!!!!! And that doesn't account for the wheeze of valuation fees if you want to change lender. Those seem to be around £1000 for some minimum wage Jub to spend 5 minutes on Google. In short, the industry has moved very rapidly to a fee generation model from an income gen and actively incentivises short term contracts so as to facilitate enormous rollover charges.
So, if your debt is down towards the level where the fees for rolling over become significant percentages of your lifetime costs then that would steer me towards a ten year interest if the rates stacked up.
10 v 5? At the moment that's a really hard call. My gut feeling on 5 year deals is that this takes us to 2022/3 and that's probably about the time that any big ramifications of Brexit will be coming through. That could mean that you are remortgaging at a slighltly lower rate (base can't go significantly lower) or at a massively higher rate as base rates could be up as could market uncertainty. So if the rates were comparable I personally wouldn't give a 5 year a look in over a ten.
Thanks for the replies.
It seems a difficult one to call which of course it is.
One thing I have seen is a lifetime tracker from Santander with no ERP if we leave after 2 years which seems a good option. I will keep looking as we hadn't considered not being on a fixed but its a possible.
It seems a difficult one to call which of course it is.
One thing I have seen is a lifetime tracker from Santander with no ERP if we leave after 2 years which seems a good option. I will keep looking as we hadn't considered not being on a fixed but its a possible.
DonkeyApple said:
Secondly, the size of the loan. All these stty rollover fees that the industry now actively encourages add up significantly over the lifetime of a mortgage. Someone living on 2 years fixes will probably pay 15 big fees over their lifetime. Paying £1000 every couple of years on a £1m loan is fine but I believe the average U.K. mortgage is under £100k so punters are forking out an extra >1% every time they rollover!!!!! And that doesn't account for the wheeze of valuation fees if you want to change lender. Those seem to be around £1000 for some minimum wage Jub to spend 5 minutes on Google.
This in spadestty rollover fees that the industry now actively encourages add up significantly over the lifetime of a mortgage. Someone living on 2 years fixes will probably pay 15 big fees over their lifetime. Paying £1000 every couple of years on a £1m loan is fine but I believe the average U.K. mortgage is under £100k so punters are forking out an extra >1% every time they rollover!!!!! And that doesn't account for the wheeze of valuation fees if you want to change lender. Those seem to be around £1000 for some minimum wage Jub to spend 5 minutes on Google. As I work in finance (not mortgages) I often get asked by friends about mortgage deals - scary how often they quote me some deal with a great headline interest rate and forget the £1-2k arrangement fee which adds a huge slug to that great looking IR
Adam B said:
DonkeyApple said:
Secondly, the size of the loan. All these stty rollover fees that the industry now actively encourages add up significantly over the lifetime of a mortgage. Someone living on 2 years fixes will probably pay 15 big fees over their lifetime. Paying £1000 every couple of years on a £1m loan is fine but I believe the average U.K. mortgage is under £100k so punters are forking out an extra >1% every time they rollover!!!!! And that doesn't account for the wheeze of valuation fees if you want to change lender. Those seem to be around £1000 for some minimum wage Jub to spend 5 minutes on Google.
This in spadestty rollover fees that the industry now actively encourages add up significantly over the lifetime of a mortgage. Someone living on 2 years fixes will probably pay 15 big fees over their lifetime. Paying £1000 every couple of years on a £1m loan is fine but I believe the average U.K. mortgage is under £100k so punters are forking out an extra >1% every time they rollover!!!!! And that doesn't account for the wheeze of valuation fees if you want to change lender. Those seem to be around £1000 for some minimum wage Jub to spend 5 minutes on Google. As I work in finance (not mortgages) I often get asked by friends about mortgage deals - scary how often they quote me some deal with a great headline interest rate and forget the £1-2k arrangement fee which adds a huge slug to that great looking IR
We have been looking into a 5 year fixed rate offset mortgage, quite like the idea any savings (which aren't earning much) reducing the interest paid each month (which is greater than the savings rate).
I still can't find a better deal inclusive of fees and redemption that the 1.94% 5 year fixed YBS have on offer.
I still can't find a better deal inclusive of fees and redemption that the 1.94% 5 year fixed YBS have on offer.
I-A said:
We have been looking into a 5 year fixed rate offset mortgage, quite like the idea any savings (which aren't earning much) reducing the interest paid each month (which is greater than the savings rate).
I still can't find a better deal inclusive of fees and redemption that the 1.94% 5 year fixed YBS have on offer.
Are Atom Bank still offering low rate 5 years? I know they did a 1.29% 5 year fix but it got pulled due to huge demand unsurprisingly but I think there are still other deals available via selected brokers, heard about it via MSE.I still can't find a better deal inclusive of fees and redemption that the 1.94% 5 year fixed YBS have on offer.
djc206 said:
Are Atom Bank still offering low rate 5 years? I know they did a 1.29% 5 year fix but it got pulled due to huge demand unsurprisingly but I think there are still other deals available via selected brokers, heard about it via MSE.
Atom pulled those ridiculous rates........we did 7 in four days on that rate alone!Interesting thread this as I have my financial guy working on a new mortgage for me at the moment.
Currently on an offset with Woolwich, out of any penalty period.
£82k on a property worth around £245k so around 33% LTV
Our initial conversation focused very much on either a 5 / 10yr fixed on the existing property (he mentioned 1.55% but I don't know the lender) however I've also asked him to look at what I could extend my borrowing to if I wanted to move house - interest rates are so low at the moment that I'm wondering whether my money might be better spent upgrading the value of my property instead of having it in the bank.
Currently on an offset with Woolwich, out of any penalty period.
£82k on a property worth around £245k so around 33% LTV
Our initial conversation focused very much on either a 5 / 10yr fixed on the existing property (he mentioned 1.55% but I don't know the lender) however I've also asked him to look at what I could extend my borrowing to if I wanted to move house - interest rates are so low at the moment that I'm wondering whether my money might be better spent upgrading the value of my property instead of having it in the bank.
K50 DEL said:
Interesting thread this as I have my financial guy working on a new mortgage for me at the moment.
Currently on an offset with Woolwich, out of any penalty period.
£82k on a property worth around £245k so around 33% LTV
Our initial conversation focused very much on either a 5 / 10yr fixed on the existing property (he mentioned 1.55% but I don't know the lender) however I've also asked him to look at what I could extend my borrowing to if I wanted to move house - interest rates are so low at the moment that I'm wondering whether my money might be better spent upgrading the value of my property instead of having it in the bank.
Not sure its that low on a fixed rate. I use money supermarket for comparison, find it the best one and it tells you in seconds without filling all your details in.Currently on an offset with Woolwich, out of any penalty period.
£82k on a property worth around £245k so around 33% LTV
Our initial conversation focused very much on either a 5 / 10yr fixed on the existing property (he mentioned 1.55% but I don't know the lender) however I've also asked him to look at what I could extend my borrowing to if I wanted to move house - interest rates are so low at the moment that I'm wondering whether my money might be better spent upgrading the value of my property instead of having it in the bank.
https://www.moneysupermarket.com/mortgages/results...
interstellar said:
K50 DEL said:
Interesting thread this as I have my financial guy working on a new mortgage for me at the moment.
Currently on an offset with Woolwich, out of any penalty period.
£82k on a property worth around £245k so around 33% LTV
Our initial conversation focused very much on either a 5 / 10yr fixed on the existing property (he mentioned 1.55% but I don't know the lender) however I've also asked him to look at what I could extend my borrowing to if I wanted to move house - interest rates are so low at the moment that I'm wondering whether my money might be better spent upgrading the value of my property instead of having it in the bank.
Not sure its that low on a fixed rate. I use money supermarket for comparison, find it the best one and it tells you in seconds without filling all your details in.Currently on an offset with Woolwich, out of any penalty period.
£82k on a property worth around £245k so around 33% LTV
Our initial conversation focused very much on either a 5 / 10yr fixed on the existing property (he mentioned 1.55% but I don't know the lender) however I've also asked him to look at what I could extend my borrowing to if I wanted to move house - interest rates are so low at the moment that I'm wondering whether my money might be better spent upgrading the value of my property instead of having it in the bank.
https://www.moneysupermarket.com/mortgages/results...
Throwing in my rough details gives me a best mortgage from the Leeds, 1.55% for 5 years with a £499 arrangement fee, this on a 12 year repayment term - shaving almost 6 years from my term at no additional monthly cost... nice!
K50 DEL said:
Thanks for that, very useful.
Throwing in my rough details gives me a best mortgage from the Leeds, 1.55% for 5 years with a £499 arrangement fee, this on a 12 year repayment term - shaving almost 6 years from my term at no additional monthly cost... nice!
Thats not a fixed though but a discounted variable. Cheapest fix is 1.69% or £5 more a month, hardly going to break the bank.Throwing in my rough details gives me a best mortgage from the Leeds, 1.55% for 5 years with a £499 arrangement fee, this on a 12 year repayment term - shaving almost 6 years from my term at no additional monthly cost... nice!
interstellar said:
K50 DEL said:
Thanks for that, very useful.
Throwing in my rough details gives me a best mortgage from the Leeds, 1.55% for 5 years with a £499 arrangement fee, this on a 12 year repayment term - shaving almost 6 years from my term at no additional monthly cost... nice!
Thats not a fixed though but a discounted variable. Cheapest fix is 1.69% or £5 more a month, hardly going to break the bank.Throwing in my rough details gives me a best mortgage from the Leeds, 1.55% for 5 years with a £499 arrangement fee, this on a 12 year repayment term - shaving almost 6 years from my term at no additional monthly cost... nice!
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