Soldato
- Joined
- 27 Aug 2005
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- 3,740
Are you only considering 5 years?
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Yeah, I think so. Whilst slightly lower rates are available on 2 year products, it's always a gamble. No one knows what the economy will be like in the few years down the line. I like the certainty of knowing what I'm paying over the next 5 years.
Apparently mortgage brokers have been making hay with the very short term fixes.
Some sanity may return to the market one day.
Brokers steering borrowers to two-year mortgages, whistleblower claims
Given the mortgage rate spikes of the past few years, borrowers are keen to get the right advice - but one insider suggests some brokers aren't acting in their best interests.
www.thisismoney.co.uk
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Apparently mortgage brokers have been making hay with the very short term fixes.
Some sanity may return to the market one day.
Brokers steering borrowers to two-year mortgages, whistleblower claims
Given the mortgage rate spikes of the past few years, borrowers are keen to get the right advice - but one insider suggests some brokers aren't acting in their best interests.www.thisismoney.co.uk
I don't think I'd want a 5 year at the moment. But it's definitely a gamble. I think we are about evens for risk of up and down.
If I were picking today? Tracker I think.
Soldato
- Joined
- 12 Feb 2006
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- Surrey
The product fees are a killer. £1k to pay every renewal. Banks must be making a killing now everyone is going for shorter terms
If you don't owe mega amounts on your mortgage then a 5-year fix is still fine, as it would take big swings in interest rates to make any significant change in monthly payments. (At least that's what I'm telling myself as I'm due to go from 1.69% to 4.14% for a new 5 year fix! in November 
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I was interested to see my broker got paid £2.5k for arranging my mortgage...
I was also less surprised that they immediately dropped their fee when I told them I'd do it myself.. I mean, I don't entirely care they've been paid although I get somewhere down the line I've paid it. All that said I have the same rate as if I did it myself and I didn't have to lift a finger so... profit?
Also.. desktop valuation. I swear they've learned nothing.
I was also less surprised that they immediately dropped their fee when I told them I'd do it myself.. I mean, I don't entirely care they've been paid although I get somewhere down the line I've paid it. All that said I have the same rate as if I did it myself and I didn't have to lift a finger so... profit?
Also.. desktop valuation. I swear they've learned nothing.
If you don't owe mega amounts on your mortgage then a 5-year fix is still fine, as it would take big swings in interest rates to make any significant change in monthly payments. (At least that's what I'm telling myself as I'm due to go from 1.69% to 4.14% for a new 5 year fix! in November
Can't see rates going over 5 or under 3 in the near future so I'd agree, no real benefit in a 2 year.
Soldato
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- 12 Feb 2006
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- 17,715
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- Surrey
idk, reform look to be making an issue for the next election. as that approaches, whenever it happens, i imagine there will be tones of from businesses about how stable whatever government will govern after the next election, given we're unlikely to have any sort of majority, and if reform win a majorty, the years ahead willl be completely unknown and could cause something similiar to liz truss econimics or even worse
A super common mistake I see people make comparing mortgages (high fee low rate vs low fee high rate) is they only look at the cost of the two over the fixed term, but don't think about equity (i.e. how much you owe at the end of it). So you are doing the right thing looking into this as a rule of thumb is if two products have the same payments over the fixed term, the one with the lower rate is slightly better due to leaving you with a smaller balance. I usually use a mortgage calculator and sum up total payments and outstanding balance for both products. My gut feeling is probably the 0.21% difference in rate on only a £120k mortgage probably won't outweigh the £275 saving so the 4.14% is probably better, but do the calcs. Another rule of thumb is the smaller the mortgage, the less sense big fees make.
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I paid off the mortgage at the beginning of the year and have watched my credit rating drop since.
Checked today and i am down from 1000 to 974. It says, "no mortgage on account".
974 is still decent, but didn't know it would effect my credit rating.
Checked today and i am down from 1000 to 974. It says, "no mortgage on account".
974 is still decent, but didn't know it would effect my credit rating.
Literally nothing. Move on an enjoy your life.
The lender I work for doesn't use those.
All though human valuers are not perfect either
Looked at a remortgage application for a very standard BTL properly, valuation report in. Valuer said ongoing structural movement, gave it a NIL valuation, not suitable security.
Checked who it was currently mortgaged with, and yup mortgaged with us.
Found the old application which was only a few years ago, valuer mentioned it but said it's long-standing and non-progressive.
So that one will be interesting....
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Yeah I noticed that as well. Get a good credit rating means borrowing money and keeping yourself in debt. Every so often when I log into my bank account it'll say my credit rating has changed despite not necessarily doing anything different spending wise that month. Seems to gain and drop about 12 points each time. As budforce says don't let it worry you and just get on with things knowing you've paid off your mortgage!
Associate
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- 22 Jun 2018
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- Doon the watah ... Scotland
My understanding around some the credit rating is that it rates your ability to pay back to lenders. That way, they can assess whether they are likely to get back the money they give to you.
Without a mortage, then you aren't demonstrating / evidencing your ability to payback to a lender. Hence the decline in your credit score. Similar thing with credit cards.
Without a mortage, then you aren't demonstrating / evidencing your ability to payback to a lender. Hence the decline in your credit score. Similar thing with credit cards.
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I feel your pain. Exactly the rate I'm about to leave! Fingers crossed for a BoE base rate cut in November.If you don't owe mega amounts on your mortgage then a 5-year fix is still fine, as it would take big swings in interest rates to make any significant change in monthly payments. (At least that's what I'm telling myself as I'm due to go from 1.69% to 4.14% for a new 5 year fix! in November
This is definitely a concern of mine too, hence looking to fix for 5 years. Will I kick myself if rates drop a little after taking a five year fixed? Probably, but not as much as I'd kick myself if a took out a 2 year fixed and rates were higher at the end of that.
Thanks for that info. Found a calculator on MSE (don't know why I didn't think of that first!) and at the end of the 5 year term, the outstanding balance will only be ~£400 more on the 4.14% deal - so definitely not worth the £lol product fee for the lower rate.
I last had a credit card in 1980, a Barclaycard. I have never been refused credit, a mortgage or anything else since.
Associate
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- 19 May 2010
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I first checked my credit score in 2012 when I was buying a brand new car on finance at age 29. I’d never looked at it, had loads of loans and a few credit cards but never missed any payments.
It was 999.
13 years later I have a mortgage, a car loan, two credit cards including an AMEX which takes the brunt of my spending for air miles and is cleared each month.
My credit score has never budged a single point.
I’m not even sure it’s a real thing at this stage…
It was 999.
13 years later I have a mortgage, a car loan, two credit cards including an AMEX which takes the brunt of my spending for air miles and is cleared each month.
My credit score has never budged a single point.
I’m not even sure it’s a real thing at this stage…
If we are talking mortgage eligibility.
Its not so much that, but the end effect is yes you are more likely to be granted a mortgage.
But it isn't so much your ability to repay debt, affordability models do that, your credit card isn't really here nor there unless you have a large amount of credit card debt which is only ever a bad thing.
What it does show is traceability.
Its more that you are who you say you are, if you have some forms of credit agreements (anything) and have been servicing them for an amount of time, chances are you are either not some complete fraudster, or, someone giving a false address to try to hide detrimental information.
Being registered on the voters roll is important as well.
If I seen someone on the voters roll at their address for 10 years, even if they had very limited credit agreements, probably ok, Vs someone who isn't, and only had like a mobile phone contract setup 3 months ago.
But yes, having say a credit card agreement and voters roll for a while will drastically improve the scenario. It's not necessarily that you are evidencing that you are repaying debt though.
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