Mortgage Interest Rates

Psycho Sonny said:
Should have fixed for 2 years then used the lower LTV at that point for a better deal.

Unfortunately people don't give this information or suggestions when people ask how long they should be fixing for.

It's always best to fix shorter terms if there's a good chance rates won't increase and your LTV is high.
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Valuation aside I am only at 85% so need '2 more years' to really put a dent into it. To be honest the only advice I got at the time was rates can only go one way.
 
dLockers said:
Valuation aside I am only at 85% so need '2 more years' to really put a dent into it.
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You get a better rate for every 5% you gain in LTV.

So if you can gain/knock off 5% within 2 years it's worth it. If you gain or knock off 10% or more that's even better.

So let's say you take out a 90% mortgage and manage to pay off 5% within 2 years well that will get you a better rate come renewal time after 2 years. Not a huge amount but it's something. But during that time you could have gained another 5% through value increase of the property so you move into 10% better LTV.

You have to factor in property increases too so you technically don't even need to pay off 5%, you don't need to pay off anything if your property increases by 10% you get your discount through that.


It's something a lot of people don't think about or are told about when buying their first home. It's only afterwards they realise that.
 
Yeah makes sense. I am on 2.34% now so unsure if a 2year fixed would have been a higher rate at the offset?
 
Once you get to around 60% the LTV ratio stops mattering and dropping a single band may not mean you are offered a better rate. Just checked my current lender and at 70 and 75 the rates are the same. The gaps between the rates offered get smaller and smaller at you come down the bands too.
 
Just done an indicative looksy - with 382/450k it offers 2.57% fixed 2 years or 2.71% fixed for 5 years. With 405/450k it offers 3.23% fixed 2 years or 3.41% fixed for 5 years.

With a looking glass I guess I could have saved a bit!
 
dLockers said:
Yeah makes sense. I am on 2.34% now so unsure if a 2year fixed would have been a higher rate at the offset?
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The opposite. The lower you fix for the better rate you get normally. Obviously there is some rare cases of them being the same or less bit it's rare.

So on a 2 year fix it could have been 1.99% to begin and then after 2 years you could have dropped a band or two and got 1.89%.
 
dLockers said:
Just done an indicative looksy - with 382/450k it offers 2.57% fixed 2 years or 2.71% fixed for 5 years. With 405/450k it offers 3.23% fixed 2 years or 3.41% fixed for 5 years.

With a looking glass I guess I could have saved a bit!
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It's best not to beat yourself up about it. It's a lesson learnt and hopefully you can pass on the advice to someone else so they don't repeat the same mistakes or at least understand what it all means and how things change in the future.

I could have saved a chunk myself but everyone I asked for advice all said go for a long fix because interest rates can only go up. A week after my application was approved they went down and down further still. So they were completely wrong. Even if they had stayed the same I could have benefited from the better LTV rates as I overpaid massive amounts thanks to investments I cashed in.
 
Also didn't really think about that. By chance it might work out. Might hit 75 on remortgage. But certainly wasn't planned.
 
413x said:
Also didn't really think about that. By chance it might work out. Might hit 75 on remortgage. But certainly wasn't planned.
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Nobody does. Awareness seems rather poor about it especially when people ask others for advice.

With rates being so low I plan to actually go against the grain and do the following.

Release equity (I only have 40% LTV so going to go back up to 60% whilst borrowing is so low)

Extend my term from 16 years to 35. This will make my monthly payments ridiculously low.

Use the equity release to do multiple projects which will increase the size of the home, usable space and value.

Use the money saved on monthly payments to invest into stocks, shares, commodities, etc.

I'd like to be in the position in 10 years time I can go straight out and buy my next home cash or close to that as possible thanks to the investments working for me. So the equity, term, etc doesn't really matter to me as I'm in the lowest band now thanks to both overpayments and increase in value over the last 4 and a half years. I've went from 80% LTV to 40% LTV in 4.5 years. My original plan was to keep on overpaying and be mortgage free within 15 years of the original purchase however decided it's better to gamble and aim much higher.
 
Psycho Sonny said:
So let's say you take out a 90% mortgage and manage to pay off 5% within 2 years well that will get you a better rate come renewal time after 2 years. Not a huge amount but it's something. But during that time you could have gained another 5% through value increase of the property so you move into 10% better LTV.
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It's not quite as easy using the value increase of the property though. I planned on doing this in my last house but the bank won't just apply average price increases and accept that as the value (or even specific local house price increases) I would have needed to pay for an official valuation of the house. Then there's the risk that if the valuation isn't enough to get you into the next 5% band it won't help your rate at all and you've just wasted a few hundred for the valuation.
In the end it worked out that I was quite close to moving down a band but the price increase wouldn't have been enough to take me into the next band below that so I could just overpay a bit extra from my savings and didn't look much more into a valuation.
 
touch said:
It's not quite as easy using the value increase of the property though. I planned on doing this in my last house but the bank won't just apply average price increases and accept that as the value (or even specific local house price increases) I would have needed to pay for an official valuation of the house. Then there's the risk that if the valuation isn't enough to get you into the next 5% band it won't help your rate at all and you've just wasted a few hundred for the valuation.
In the end it worked out that I was quite close to moving down a band but the price increase wouldn't have been enough to take me into the next band below that so I could just overpay a bit extra from my savings and didn't look much more into a valuation.
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Depends on the lender.

Obviously common sense applies too where you overvalue it the bank has to have a mechanism for its own safety.

Or else I could say my home has went up by 500k. I need to be able to prove that and some vendors will do more through checks than others.

I can show them x number of homes sold for much more than what I paid that are the same size and shape as mine after I bought mine.
 
Struggling to get decent interest rates.

2 years ago I fixed at 2.8% and it ends 31st of May.

Can’t get lower than 3.16% which adds roughly £110 a month onto my mortgage, anyone else found this?

Fixing for 5 years saw the interest rate over 4%.
 
What is your LTV? I am still 3 years in to a 5 years fixed so I've not looked for a while. Currently paying 1.69%.
 
I've just gone on nationwide website, put in a 85% ltv mortgage and it's offering me 2.6% with a £1k fee, or 2.8% with no fee.

Are you sure the value and borrowing figures are based on 85% ltv and not higher?
 
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