I bought my house last year and had a similar situation, 85% LTV. I decided to go for 2 years because I'll be under 80% LTV after those 2 years so might get a better option. Of course, if the rates go up you may end up in a lower LTV band but still have a higher percentage.
(re)Mortgage Question, need some advice!
- Thread starter gradyhawks
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I bought my house last year and had a similar situation, 85% LTV. I decided to go for 2 years because I'll be under 80% LTV after those 2 years so might get a better option. Of course, if the rates go up you may end up in a lower LTV band but still have a higher percentage.
Yeah thats my thinking, anyway, the 5% difference in deposits can go in $GME :eyes:
Word of warning for 5 year fix, we are looking to move soon about 3.5 years in to a 5 year fix and if we don't do the back to back sell and buy within 3 months then would have early repayment fee of >7k. So it makes much more expensive the option to move in with family between selling and buying, which could be advantageous as would mean we wouldn't have to hurry to buy once we get an offer on our place. We may even end up doing this anyway, so having fixed for 5 years may end up costing me 7k..
AFAIK this early repayment fee is higher than you'd usually get, because it wasn't an off the shelf mortgage.
AFAIK this early repayment fee is higher than you'd usually get, because it wasn't an off the shelf mortgage.
Yeah, if moving house within a few years is on the cards then it's silly to fix for 5 years. I've been wanting to move for a while hence constant 2 year fixes. I'm just in the unfortunate position og getting bitten as my ERC with my current lender is 2% and it ends on the 31st of March, the (current) final date to complete for stamp duty savings. BOI also won't budge and porting with them is going to be massively complicated due to borrowing more money so I may have to bite the bullet and pay it.
I remortgaged only 5 months ago but made sure it was a tracker with no fees as knew I was going to move. It seems to have worked out well as they're also doing my new mortgage but my broker at the time was unwilling to go for this as it was "short term lending" for a mortgage. He suggest I pay a 4+% variable rate instead.
Of course I just did it direct instead
Current tracker is1.39% (0.1+1.29%), 2 years, zero fee at 60% LTV.
Can you not port it and just take out another mortgage for the additional amount? my brother in law has done this a few times and I think they have three difference mortgages now, simply because each time they moved it was better to keep the deal they had already.
When we fixed for our 5 year mortgage our ERC was 5% for the first year and then reduced by a percent every year if I remember. So, after 2 years you might be faced with a 3% early repayment charge. I think you really have to think about what you plan to do with the house, do you want to flip it quickly and move to the next one? or do you want to stay for a bit and do it up over a period of time. We went for the 5 year fix at the time because that gave us more stability and allowed us to plan in the changes we wanted to make to the house. We have been living her for 10 years next month and fixed for 3 years last year but we will look to move when the fix ends. In the 10 years we have owned this house the value has increased by around 35% and we have not really spent loads of money on it apart from a new kitchen. The plan is to try and sell it and buy another one to do up and have that for 5 years and rinse and repeat if we can.
See my post above. The way porting works is you wind up your current mortgage and take out a new one with the same terms, and as long as this is done within 3 months of each other then they will refund the early repayments. That's porting.
But if for any reason you don't buy within 3 months then all early repayments are non refundable.
We could but the current lender are playing funny buggers. They're trying to make things very difficult and will only lend the extra amount if we enter into a new fix at over 2% for 2 years with high ERC's. Even if we did manage to get it on variable rate with no ERC, we'd be stuck on it for several months as lenders don't like lending money if you haven't been in the house for x months. We would then have to pay yet another mortgage fee and all the while being on 4% plus means most of the money is going on the interest rather than capital.
Yup, in your situation you may have found a variable deal was cheaper, or at worst a few pounds a month more expensive but then will have saved you thousands paying to get out of the deal.
We can overpay on the current mortgage to bring the ERC down to just over £3k, but it's still a lot less than Stamp Duty is if we complete before the holiday. And then there's the extra interest from a variable rate (if the lender will actually do that). I also don't want to be running several mortgage applications at once if we end up in one situation or another.
To be honest I have kind of lost hope that we will complete before the holiday so I think it's a moot point. Don't ever get a mortgage with the Bank of Ireland UK, they're as flexible as an iron girder.
Caporegime
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- 21 Jun 2006
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Need some advice from you sages of old about mortgages and such.
We're looking to remortgage to get a better rate as our 2 year fixed is almost over and I think we're after a 5 year one since rates are nice and low, it seems, and a bit of security in the payments staying put. So we've got a couple of decent offers to go for with Nationwide but can't decide between these two.
Looking at the total paid over 5 years, they're essentially the same after you take into account the £999 "product fee" the better rated one has. Is that the case? Or am I missing something blindingly obvious?
(also if anyone has a good reason not to just go 5 year fixed, I'm all ears!).
Thanks,
Grady
You can phone them and they will explain which is better for you.
Personally I'd go 2 year fixed. It has an even lower interest rate normally but nationwide is weird and offering the same last time I checked.
I don't see interest rates going anywhere as banks will be given cheap money. Sunak wants savers to spend their savings therefore I see negative interest rates incoming where it costs you to have money in the bank.
I don't see them going up now for several reasons. Brexit, Covid, large amounts of unemployment, debt increasing for masses. Increasing interest rates would literally destroy the country.
If anything tracker could be the smart play if you are a gambler.
Again I'd also see whatever it the majority say on here and do the opposite. I've been waiting 5 years for an increase based on advice from here in the past and it's not come yet.
But do you know what can reduce government debt fast?
Inflation, so there won't be that much incentive to keep interests this low. It will be a balancing act, low enough to keep the economy going, but enough to reduce debt by relative value.
Inflation can reduce debt faster than increasing taxation rates as long as it's not too high to damage the economy.
The target is 2%, but we are at 0.6% at the moment.