10yr fixed mortgage? help ftb

Philz0r

Philz0r

Philz0r

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hi guys im a first time buyer and know nothing about mortgages.

me and my girlfriend have found a house we love and wana proceed to the next step.

i've looked online and found a 10yr fixed rate mortgage at 5% with a 25% depoisit and £1500 fee. (yorkshire building society). would this be a good idea?


can anyone offer me any advice on this subject to as i know very little about the whole buying a house thing.

thanks Phil
 
I'd say yes, as I'm very risk averse.

Loads of people will turn up shortly to tell you that you shouldn't fix, as you can save money on a tracker and invest the money you save, which is great if you have no concerns about rates hitting 10% or worse in the next 10 years, which is a chance that I personally am not prepared totals but which many here are.

Look into the difference in rates with or without the fee. Depending on the terms it may be better to take a higher rate and not pay it, but it varies on a case by case basis.
 
Will the mortgage be in your name or yours and your girlfriends? What kind of sums do you have to pay if you need to get out of the mortgage in the 10 year fixed period. You need to consider if you split with your girlfriend just in case.
 
I have looked into mortgages a bit recently and on calculation websites it takes you the repayment but has a warning at the bottom which says if it hits 12% then it will be X amount per month.

That said, if the interest rate goes up above 10% and with house prices as high as they are, pretty much everyone on a mortgage would lose their house
(didn't the % go really high in the early 90s? I was a bit young then though).


For example, 100k over 25 years.....

5% is £591 a month. Perfectly affordable for someone with a job on £20-25k (taking home £1200-1500 a month).
12% is £1062 a month - Simply not possible to pay unless you walk to work, eat value beans and sell the car.

Only you can make the choice I am afraid!

EDIT: Remember that if you get the mortgage in your girlfriends name as well as yours then you can borrow more, but then the amount will be so high that if she has a baby she cannot afford to give up work. Just something to bear in mind!
 
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10 years is a very very long time and you and your girlfriend don't know what is round the corner .

What sort of tie in are they asking for here ? Sorry to be Mr Doom but what happens if you guys split ? I would imagine the penalties for early redemption are horrendous.

Unless you have kids and are happy with the schools they are going to for the next ten years then give this idea a wide birth.
 
I am old enough to remember the dark days of the 15% interest rate on mortgages, but my mortgage was only £18k at the time. I would say 10yrs at 5% isn't a bad deal and it would give you peace of mind. But only you can decide.
 
Sounds like a long time to fix a mortgage to me;

Yes it does give you security on knowing what you can afford, and rates going up (as they will do in a year or two - they have to move sometime!) won't affect you as you will have it fixed. However, a lot can happen in 10 years.
 
its a good deal,i have a fixed 5 year mortgage and i know how much each month i pay for the next 5 years which is a ideal situation for making your finances all add up.
 
Philz0r said:
i've looked online and found a 10yr fixed rate mortgage at 5% with a 25% depoisit and £1500 fee. (yorkshire building society). would this be a good idea?
Click to expand...

Bite their arm off mate, rates will be around that by the end of the year (or close) I am certain.

Be sure you are well aware of early repayment penalties too
 
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Just completed buying first house (finally get the key next week!!!) Best to get a fixed rate for 5years max. Don’t go for 10 years, even my own mortgage company said the anything higher than 5 years is a bad idea.
If you can make it 2 or 3 years, at least then if anything goes wrong it won’t be so bad for both of you financially. Once the fix term is up, depending on how your situation, remortgage for another few years.
 
10 year fixed at 5% sounds like a good deal to me.... check its portable, so you can move if you want

I am no ace at finance, however I would

1) get interest only (amking sure it allows for over payments, but I thnk thats the norm)
2) over pay 10% (or what ever you can) every year (do it in 1 lump at the beginning of the year if you can)

that way if you get in trouble you can reduce your outgoings by not overpaying.

consider critical illness / life insurance, shop around get proper advice, I have been advised to link the cover to the outstanding loan, also not to for various reasons...
 
Philz0r said:
hi guys im a first time buyer and know nothing about mortgages.

me and my girlfriend have found a house we love and wana proceed to the next step.

i've looked online and found a 10yr fixed rate mortgage at 5% with a 25% depoisit and £1500 fee. (yorkshire building society). would this be a good idea?


can anyone offer me any advice on this subject to as i know very little about the whole buying a house thing.

thanks Phil
Click to expand...

Having been fortunate enough to have never bought a house with any form of mortgage and paid cash for my properties, I'm probably not the best one to advise you BUT, I would say it's better to know just exactly how much your mortgage will be for the next 10 years! I too would be risk averse just as the other poster has said and by knowing how much your outgoings are, you can plan your spending much better, even if it seems that you are paying too much interest right now!

However, given that the ridiculously low interest rates simply can't go on being artificially held down indefinitely, 5% would seem a reasonable figure over the coming 10 years.
Interest rates are going to have to be increased substantially if we are not to see rapidly rising inflation. Also, those who have money in the bank need a reasonable return for lending the banks their money.

The big problem is that if interest rates rise too quickly, there are already around 3 million home owners in this country who stupidly paid far too much for their homes that they couldn't realistically afford and who may not be able to service their mortgages once interest rates rise to a realistic level.
This could have a knock-on effect of flooding the market with too many properties which could in turn, drive house prices down!

Like any other investment, buying a property does not automatically mean that it will make money for the buyer. Housing should not be seen as a quick way to make a fast buck unless the buyer is prepared to also risk losing money too.
Buying a house is better seen as a long term investement where the ups and downs in the housing market will eventually cancel each other out!

If you and your girlfriend have found a suitable house and you believe you can comfortably afford it, then go for it but remember, you really need to be able to meet mortgage repayments with just one wage earner as there is little or no guarantee that both of you will always be in full time work over that period.
 
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You can get a mortgage advisor's help for free, they get paid their commission from the bank's side. They'll answer all your questions.

I wouldn't recommend a 10yr fixed mortgage.
 
lttlejoe said:
Interest rates are going to have to be increased substantially if we are not to see rapidly rising inflation. Also, those who have money in the bank need a reasonable return for lending the banks their money.
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dont forget they were 5-6% before the base rate dropped to 0.5%, the banks now make 4.5% profit where they wer eonly making 0.5 to 1%...

(though I dont think its that simple as the interbank lending is different to the base rate, someon is making a lot of money some where)
 
edscdk said:
dont forget they were 5-6% before the base rate dropped to 0.5%, the banks now make 4.5% profit where they wer eonly making 0.5 to 1%...

(though I dont think its that simple as the interbank lending is different to the base rate, someon is making a lot of money some where)
Click to expand...

The problem is that interest rates are being artificially held down mostly for political reasons, rather than market reasons. No government wants to be seen as the one which puts interest rates up so high that people lose their homes. If the last government had done this before things got out of hand, the economy might have been in better shape right now.

This is the problem when a whole country's economy is effectively ruled by private home ownership and where house prices in a single region of the country is effectively affecting the whole economy.
 
malachi said:
Just completed buying first house (finally get the key next week!!!) Best to get a fixed rate for 5years max. Don’t go for 10 years, even my own mortgage company said the anything higher than 5 years is a bad idea.
If you can make it 2 or 3 years, at least then if anything goes wrong it won’t be so bad for both of you financially. Once the fix term is up, depending on how your situation, remortgage for another few years.
Click to expand...

If I followed what my advisor said when we first bought the house we would have been a lot worse off for sure.

Definitely take on board advice from your advisor but doesn't hurt thinking for yourself either. Work out affordability if you were on variable rates and they rocketed up to (e.g. base rate at 5%, 6% +).

If the OP could imagine being in that house in 10 years (i.e. room for kids if they want some etc) then would be worthwhile.

It is a no brainer as far as the rate goes though.
 
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To me the question isn't whether the mortgage is a good deal for 10 years it's whether your relationship is a good deal for 10 years :p
 
http://www.guardian.co.uk/money/2010/jun/11/yorkshire-10-year-fixed-rate-mortgage

"Borrowers must pay early repayment charges of 7% of the loan if they want to get out of the deal before 2013, decreasing on a sliding scale to 1% in the last year."

and

"This product is portable, which means in theory you could take it with you if you move during the fixed period, but this will depend on the lender approving your new property purchase and LTV, which is by no means guaranteed," she said.
 
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