Mortgage advice

Ripper

Ripper

Ripper

Soldato
Joined
25 Jan 2003
Posts
11,569
Location
Newark, Notts
Given the current economical climate, what would you do if you were to begin a new mortgage now? I have a 20% deposit and have the option of a tracker mortgage with RBS at 2.49% above base rate. Alternatively, I could do a fixed rate with Alliance and Leicester at 4.34%. Repayments would be £378pm on the tracker, and £426 on the fixed. A 1% rise to the base rate would result in £48 extra p/m on the tracker (equalling the fixed rate), but obviously it could go up higher than that.

My gut feeling is that the base rate will go up and i'll suffer (I guess it wont go down any further?), then again it might stay low until the end of the initial term (2 years) and I'll then be able to remortgage. Really not sure what to do, my FA hasn't been much use either.

Opinions?
 
To be honest...the fixed rate isn't THAT much more expensive...Then again that depends entirely on whether or not you are actually paying it by yourself or sharing the costs :p
 
If you can afford the fix now, you will most likely be able to afford it later. Afford the tracker now and it goes up you may start to struggle. Do the calculations on the trackers and see if you can manage a 1% or 2% increase.
 
Big rumours recently of a "double dip" in the housing market about to unfold so I'd probably hold off for another year if I was you.

I liked the old saying "Dead cat bounce" :D
 
What's the fee for A+L?

Chelsea BS are coming in at 4.18% for 2 year fix but £995 in fees or Ipswich BS at 3.99% and fees of £1149.

Have you spoken to an indepedant mortgage advisor? They will do the leg work with working out the best rate and the cost over the 2 years including the fees.
 
The amounts in the OP include the fee's (£1679 on the A&L! - Shocking). I did notice the Chelsea BS rate on moneysupermarket, i'll ask my FA if he can give me a quote on that.
 
I would be very suprised if the base rate goes up more than 2% in the next two years. All the signs seem to point to the rate staying still in the short term. IMO go with the tracker.
 
Get whatever gets you on the SVR as soon as possibly currently I think. All 'new' mortgage products are terrible value currently
 
Whatever you can afford now with the current interest rate double the interset part and make sure it is still affordable. May sound crazy but we live in times with inflation up and interest rates can only really go one way. House prices are on a knife edge too with many predicting stagnation and other big drops as FTB's with 20% deposits like yourself are quickly becoming extinct.
 
For those that say rates aren't going to rise more than 2% you need to look at the figures. Inflation is about to rise again, fuel is going up along with the cost of everything else. Rates are currently at an all time low, even 2% rise brings the base rate lower than what it was when inflation was under control and to control inflation they will need to rise rates.
 
Ripper said:
Given the current economical climate, what would you do if you were to begin a new mortgage now? I have a 20% deposit and have the option of a tracker mortgage with RBS at 2.49% above base rate. Alternatively, I could do a fixed rate with Alliance and Leicester at 4.34%. Repayments would be £378pm on the tracker, and £426 on the fixed. A 1% rise to the base rate would result in £48 extra p/m on the tracker (equalling the fixed rate), but obviously it could go up higher than that.

My gut feeling is that the base rate will go up and i'll suffer (I guess it wont go down any further?), then again it might stay low until the end of the initial term (2 years) and I'll then be able to remortgage. Really not sure what to do, my FA hasn't been much use either.

Opinions?
Click to expand...

I'd be shooting for a 5 or even 10 year fixed rate, and a 15 year term, as short as you can afford. A few years from now, interest rates could be crazy, 6-8-10%.
 
I'm "out of contract" on my current mortgage - just paying standard variable rate.
I think we've got another 6+ months of low interest rates and so I'm going to stay where I am.
However the second I start to see rates increasing I'm going to be looking at locking for 5+ years, whatever I can get for a long period.

Once rates start to go up its going to get messy.
 
I went for a 5 year fixed rate because I think a degree of certainty is worth paying for.

Don't listen to the doom and gloomers who have invaded this thread with their scaremongering. Interest rates will probably go up but we're in so much debt that no-one will be able to afford their repayments if they go up to some of the more ridiculous predictions in this thread.
 
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