Offer accepted. Need to pick 3 or 5 year help!

DJMK4

DJMK4

DJMK4

Soldato
Joined
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S.Wales
Hey all

Had an offer on a 2 bed accepted today. Got the AIP in place and going through motions. One thing I am not sure about is the 3 Vs 5 year fixed.

I'm on my own and taking out a £153k mortgage on a £170k property, 10% deposit 90%LTV.

3 year fixed is coming out at 2.18% or 2.50% for 5 year fixed.

Both cashback offer of £500 with Virgin money

No one knows what's going to happen about rates down the line .But I also don't know what my future will be, I'm not in a relationship so I picked it as it's a 2 bed in an area I like on edge of city. I'm.asking advisors if for any reason I sell in say 3 years would I get penalised . I know you have options to port mortgage or early repayment.

Some friends.have gone for 3 year fixed but have more savings and on higher salary than me ( and them.having mortgage where as I have not)

Difference in monthly repayments is only about £30pm more for the 5 year compared to 3.

5 year also comes.with a slightly higher early repayment charge if that happens

I need to have a think, if you were in similar situation would you go for 3 or 5?
 
I’ve always gone for 5 year fixed, but I prefer the security. Now 8 years in and have a good rate due to a healthy deposit.

As things stand, rates are only going to rise I suspect. It’s all about risk.
 
Probably worth the 5 year then, it's worth the extra £30 or so a month by the looks as they probably will rise

I just didn't know about any penalities if you sell within 3 years say. I know if your moving to a different property you can port across. Remortgaging could come with some costs
 
Im applying for 5 years despite a much higher difference in interest than yours.
Interest rates went up 0.25 in december wasn't it, and all indications are that it'll go up another .25% in may. One more rise after that and you are better of on the 5 year.

And then there's the biggest unkowen in decades that is brexit, and who knows what the fallout of that will be, seeing as our goverment have decided nothing and totally incompetent.
 
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I'll go for the 5 year fixed it defenatatly seems to give you that bit of security with no one knowing what will happen with brexit etc. Yeh heard about the may rise
 
I bought a house a few months ago and had a similar decision. I decided on the 5-year, as I decided the likelyhood of the interest rate going up in the mean time would most likely mean it's the cheaper option. I also worked out the interest rate would only have to rise by less than 1% between the beginning & end of a 3 year, for it to cost me more over a 5 year period (if I had chosen the 3 year).

There may well be a charge for selling before the fix is up. Do you have your "key facts" document? That should detail any fees there are for overpayment/early termination. You then just need to weigh this cost up (if any) with the likelyhood you think there'll be of you moving within the fix period.
 
If you have little flexibility in your outgoings and aren't expecting any big pay rises go with the 5 year fixed, preferably one that lets you overpay without a free. Nationwide used to let you overpay £500 a month when I was with them. It might not be something you need at the start, but you might want to 2 or 3 years in to reduce the ongoing monthly cost, or the length of the mortgage (they let you choose).
 
I think a 5 year would would sound sensible, I am going to go with it I think.

Early Repayment Charges. An early repayment charge applies if you want to repay the mortgage early. The charge is calculated using a loan amount of £153,995.00 and is based on 4% of the outstanding loan if the mortgage is repaid before 01 July 2023.
In addition, an Exit Fee of £50.00 is also payable. Based on the original amount borrowed, a cash example of the early repayment charge that could apply would be £6,209.80 if repaid before 01 July 2023. Therefore the maximum charge you could pay would be £6,159.80 plus fees which are currently £50.00. What happens if you move house? If Virgin Money plc is willing to accept a mortgage application from you in the future
Click to expand...

So it could actually be less if I decided to sell in 3-4 years time as the mortgage would have been paid down a little. Maybe end up being £3-4k?


Overpayments

These are restricted to 10% of the outstanding balance per year. During the Early Repayment Charge period you are allowed to make overpayments of up to 10% of the outstanding balance in each calendar year without incurring an Early Repayment Charge.

Over 30 years (I am planning to once I get some savings behind me again, overpay a little). so should come down to 24-25 years, FTB fixed rate of 2.50% until 01/07/2023, variable rate 4.79% for 2 years, then 4.54% thereafter


The total amount you must pay back, including the amount borrowed is £264,378.71 This means you pay back £1.72 for every £1 borrowed

6. What you will need to pay each month
Monthly payments 62 payments at a fixed rate of 2.50% £608.47 followed by 23 payments at a Variable rate, currently 4.79% £775.34 followed by 275 payments at a Variable rate, currently 4.54% £757.21
 
We're going for a 5 year fixed as well.

Just had our offer accepted on a house, so will be a mortgage of about 180k. Whilst the monthly payments on a 2yr fixed look nice, i'd rather be secure in knowing exactly what my monthly mortgage payments are over 5 years.

We're going for a 35 year term to keep the costs low, and then plan to overpay each month if there's spare cash.
 
I’m switching to a 5 year fixed (at the end of our initial 2 year fixed). Rate dropping from 2.5~% on our 2-year to 2.09% on the 5, which is nice.
 
We've just gone for a 5 year fixed at 1.74% but much lower LTV at around 30%. Moving to a bigger house and the Mrs will likely pop out a kid so a bit more security with budgeting over the next few years.
 
Go with the 5 year fixed. Interest is at an all time low. I'm currently paying 2.84% on a 5 year fixed. But i fixed just before Brexit and the interest rates were all cut after the vote.

The fact all of you are closer to 2% means even if it doesn't go up your still getting a very good deal.

It all depends on how much you value security. I do believe though that the UK cannot afford interest rates to rise too much. So many people on the bread line.

Just depends on how much risk you are comfortable with taking.

Personally in future I might just go with a 2 year fix and the money saved use to overpay with a standing order. That way if they don't use in future I will have compensated for it some what by hopefully overpaying enough to get a lower LTV
 
Bewarned I fixed for 5 years then needed to sell 7 months later. 8.5k early payment fee

That said my new mortgage is fixed for 5 years too 1.99 percent for 5 years with 480k borrowerd

I think your rates are high
 
The key is when you have made enough payments (or property value rises) such that your LTV puts you in a new bracket - THAT is when you want your current deal to end, so you can get a better deal based on new LTV.
 
Regy53 said:
Bewarned I fixed for 5 years then needed to sell 7 months later. 8.5k early payment fee

That said my new mortgage is fixed for 5 years too 1.99 percent for 5 years with 480k borrowerd

I think your rates are high
Click to expand...

I can't see any thing in searches that come any lower than 2.40% for 5 year fixed .mine is 2.50 and comes with £500 cashback

I don't think I would get a rate any lower than 2.40%

Also been to multiple brokers to compare and been to main one. How are people getting less than 2.0% ? Your not a first time buyer I guess ?
 
I am no
DJMK4 said:
I can't see any thing in searches that come any lower than 2.40% for 5 year fixed .mine is 2.50 and comes with £500 cashback

I don't think I would get a rate any lower than 2.40%

Also been to multiple brokers to compare and been to main one. How are people getting less than 2.0% ? Your not a first time buyer I guess ?
Click to expand...

I am not no but my mortgage man has come up trumps again, my deposit is around 20% of cost. / 35 years.

They are a general mortgage broker. Seems i am being looked after. Trust if you want any info :) cant say it would be the same mind
 
No worries..cheers..the.broker I'm.using is my dads friends mate who is as a property developer his mate is a broker.

Would be useful even though Im.already going through the process now.as the property is sold subtract to contract. So will be kicking off next week.

Soft search quotes to compare are ok but I wouldnt be going through another broker now, be useful to know. I am only putting down 10% on this property.
 
Just gone for a 5 year fixed on the basis that if leaving the EU causes a wobble it might have a better chance of correcting itself over 5 years than 3. It’s all what ifs and buts anyway. Ask enough people and you will get answers covering most scenarios.

Still it was nice going from 4.89% to 1.79% interest to say the least as it cut our monthly payments by roughly a third.
 
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