Need to remortgage (damn – we had a pretty sweet deal) and looking at the market there are quite a few long term fixed rate deals around – particularly looking at the 4.99% fixed for 10 years offered by the co-op. I know it’s a gamble but one worth taking?

IMO yes as there’s only one way interest rates are going to go.

Tough call really as you would be getting a mortage 4.5% above base rate which is never going to seem like a great deal. I know the good old days have passed but to think my last fix rate was 4.69%…0.19% above base rate at the time.

Agree with what Pauly says though…as Yazz once said ‘The only way is up’

Good question. Unfortunatley there is no correct answer and if your only reason to take a fixed rate is to try and beat the market, so to speak, then it’s the wrong reason. A fixed rate is priced on the markets expectations of rates over any given period – of course these expectations change frequently – and is a product that reduces interest rate risk. i.e. the risk that rates will rise to the extent that affordability becomes a problem.

The ‘price’of reducing this risk is of course, that you won’t benefit when rates are lower.

10 years is a long time fix and there will probably be penalties if you want to pay it off early so bear that in mind.

Only go for it if you prefer the certainty of a fixed monthly amount and won’t forever be comparing what you’re paying with everybody else

I’d go for a variable rate, but take advantage of the low rates by overpaying by a substantial amount each month. Then if rates do rise you can cut back your overpayment so you remain at the same monthly amount. Effectively a “roll your own” fixed rate.

As a first time buyer I can say mortgages are no easy gamble to take, there are so many options out there I’m avoiding looking and enjoying rented fixed-cost bliss while binning £6K a year 🙁

Don’t knock it coffeeking. We spent years renting while saving money for a decent sized deposit. All the while we were getting continuous crap from our friends and rellies that we were “just throwing money away” and “lining somebodies else’s pockets” (despite the fact that the rent was probably less than interest-only payments on the house we were living in).

We eventually go together a good deposit, bought a house, the market promptly collapsed and now we’re in 30k+ of negative equity.

But at least we’re not “throwing money away” any more 🙄

😀 fair point!

Agreed – I am mostly looking forward to not having a mortgage or rent soon – work is paying for the house… 🙂

5% fixed is a pretty good deal, looking at (recent) historical averages. certainly three years ago everyone was loving that as a fixed rate.

it looks more expensive now with the very low bank of england rate – which is less relevant to mortgages now due to the higher standard variable rates – or even just compared to standard variable rates themselves.

rates are very likely to go up, but picking the timescale for that is the crux. it depends on your circumstances, really, and how much equity you have, what product fee they’re charging you, and what the early repayment fees are like vs your expectation of moving in the future. 10 years is a long time!

some lenders do allow you to transfer deals across to new properties though, so check that out since that would remove one of the big downsides.

we’re in the same boat, but since things went south, we don’t quite have 25% equity on paper anymore, so the best deals aren’t available to us any more.

i think we’re going to go onto the standard variable for a bit, overpay by all we can for a while and see what happens to the market for a while. that way we don’t have the fees yet and aren’t tied into anything. it could go badly though, since houses are going down faster than we’re able to pay off the balance so the equity whilst not in danger of going negative isn’t getting bigger, and the rates offered might go up before we jump back in with a fix!

on the whole, if you can transfer the 10 year fixed or have no intention of moving, and are happy with whatever fees they’re asking for, then i’d be tempted…

IMO, remember!

What you do needs to bear in mind what your circumstances are now and will be later. Pay as much as you can afford to pay. Flexibility is best when the economy is in chaos. Is your mortgage small enough to treat like a bet and allow you to hope the rate will go up ?

Id go for a variable and over pay as much as you can each month.