Ahhhh , head hurts, mortgage choices?

So my current offer has expired, which wasn't very good but for various reasons I never bothered to come out of early.
We currently pay £1080 per month & I'm happy to do so, so it's not about getting a smaller payment, it's about getting 'it right'.

My current choices are endless, but no great deals about like the 1/2% above base that some of my mates managed to acquire a few years ago 🙁

So my short list goes like this

1, 2.5% over base for 2 years, £200 fee, can come out with no penalty after 2 months if I want, monthly payment currently £940

2, 2 year fixed at £983, same fee but with redemption penalties

3, 5 year fixed at £1044, same fee but with redemption penalties

4, 10 year fixed at £1085, same fee but with redemption penalties (5% for first 6 years then 4,3,2,1)

These are all from the same provider, but note the upfront fee, not much compared to some which run into thousands, I've tried money supermarket & they are all very competitive, but I'm not sure what to do for the best?

I know rates are only going to go up, but when they do will the banks reduce their percentage, or carry on with the 2.5% margin?
It's such a minefield & there are so many variables, 10 years seems like an eternity to fix a mortgage for, but then 5.3% APR borrowing seems very reasonable all things considered, what would you do?

Cheers in advance.

interest rates are only going to go up in the short to medium term.

the 10 yr fixed price implies something like 4.75-5%. Thats going to be OK in the short to mid term – just be wary that you may be out of the money in the latter part of the fixed period – but you can keep an eye on your redemption penalty by then to see if it makes sense to drop out.

Personally Ill be looking for a 5+ year deal vfer the course of this year if I need to refinance a brilliant deal I currently have of 0.85% over base (depends on projects)

Get an offset with someone like First Direct. Best financial decision I made.

Smurf

Cheers Stoner, I still have memories of the 13% interest rates of the early 90's, so having seen things go up & down 5% over 10 years seems fine, & to be honest I can't be bothered to chop & change all the time, it's a hassle I don't need, 10 years will see me almost to the end of my mortgage, & I would hope to be able to pay it off before then (kids permitting) so I'm not sure if I should just go 10 years fixed only to find out some better deal comes along, it would rile me considerably 🙁

Smurf, looked at them, but quite big fee to change, & there is never much in the current account, maybe a few K, the savings are tied up for a while apart from the ISA's & I don't want not to have accessible money.
Cheers.

My deal expired at the end of December and I just went back to Nationwide's standard BMR at 2.50%.

Leaves me a little exposed as I will need to keep an eye on how the rates in the market place are changing even if the base rate stays the same, although I personally have never gone for a fixed deal and always a tracker. But none of the tracker/fixed deals I was looking at seemed very attractive in Nov/early December.

Again, I would never want to be tied in for more than 2/3 years, but other people are perfectly happy with this.

So of the options you have listed it would be option 1 were it for me and my circumstances.. It provides flexibility to review the position in a few months time, provides rooms for perhaps 3 quarter point base rate rises before option 2 would become cheaper on a month by month basis?

At the end of day – everyones needs and views on financial risks are different. My decisions are based on the fact that I really do not like upfront fees (opaque pricing), I want flexibility with no extended lock-in, I am prepared to float with the market within reason as I do not need absolute certainty over a period as to what my mortgage payments will be.

The deals you outline are all very different at different ends of the spectrum. Do you know where you fall and what aspects of the deals you like rather than just the rates and monthly payments themselves?

GJP, rates would need to move above +1% for 1 to be more expensive than 2, even then it would be close, it would probably take +1.5% to make an appreciable difference.
Banks are tightening up big time, & there are very few 'free' products around. As for my position regarding risk V's reward, I guess I'm conservative, so would rather pay in the short term to reap in the long term, but then if we knew what would happen long term we wouldn't have mortgages 😉

Cheers.

try first direct lifetime tracker mortgatge at 2.5% above base rate for the lifetime of the mortgage and also no redemtion penalties during the lifetime of the mortgage. loan to value is 65%, but others also on offer with higher loan to value but with higher interest rates. also no fee involved. even if base rates went to 2.5% the mortgatge would still only be 5% and that is about average for a 5 year fix. the best thing about this one is that their are no redemtion penalties.

2unfit2ride – Member
GJP, rates would need to move above +1% for 1 to be more expensive than 2, even then it would be close, it would probably take +1.5% to make an appreciable difference.
Banks are tightening up big time, & there are very few 'free' products around. As for my position regarding risk V's reward, I guess I'm conservative, so would rather pay in the short term to reap in the long term, but then if we knew what would happen long term we wouldn't have mortgages

Cheers.

Thanks – I was guessing with number of 0.25% rises that would be needed to make the monthly payments of 1 and 2 broadly the same. Makes option 1 even more attractive IMO and I would consider myself to be risk averse.

Split the loan in two.

10 years fixed, say for 60% of total loan, so that gives you stability for a length of time, then the remaining 40% (you can play with the ratios) at something like the 2.5% over base to keep things cheap. Check the charges so the 2.5% is flexible, then if rates sky rocket you can you can dump that part of the mortgage and look for somewhere cheaper to place that part of the loan.

Best of both worlds.

GJP, the trouble is when we start to have .25% rises on a monthly basis, as we surely will after the next election, it won't take long to make a 1% change in base rate, no doubt the banks will swallow some of it because they make more interest on the base rate, it's a waiting game, but also a risk if the long term fixed rates go up accordingly.

manwells, that sounds a sensible deal, is it still available? As I said the 5% figure is about where the market will be, it's just jumping on board at the right time so you can capitalise on the rates now.

piha, nice Idea, and I get the best of both worlds aspect, but I can't be bothered to chase the market all the time, hence considering then 10 year fixed deal now.

Cheers all.

Cant see it going up yet But you should always
check with your Bank and see how and whats
happening or looking to happen.

To be honest very surprised the intrest rate can stay this
low being the way the country is in at the moment and
within the next three years.

So my advice would be to keep your eyes open and keep
in contact with whom you have your mortgage with.

grantway, after a lot of time on google & various websites my option 1 is looking the best bet (taking into account the no tie-in after 2 months).
The prediction generally is for no more than a 1% rise this year, so I may as well go with it & have to scan the market every now & again.
Cheers.