Fixed rate mortgages – how long?

For my next house I am seriously considering a fixed rate mortgage. I’m a paranoid person with money and I want the reassurance that my monthly payments aren’t going to skyrocket if the interest rates go up. As my mortgage will be less than £100k the amount I have to pay extra for a fixed rate isn’t too much (looking at £20-30 extra ish).

I reckon that a fixed isn’t worth getting unless you go for at least 5 years – if you went for a 2 year one at the moment it’d be a bit crazy as the rates aren’t going up for a while yet (maybe!). But do you reckon a 10 year one might be worth it? I reckon the rates are never going to be as low as they are now so it should be an ideal time to go for it. However there are penalties for early redemption. My thinking is that if I ever get enough cash to pay the mortgage off in one go I’ll be very happy to pay a fee on top! Anyway if we get a house that has space to expand with extensions and stuff we can spend money on doing that instead.

Sorry for the ramblings….

Doubtful any rise in rates will be coming in the period you could fix for, imo. Govt has spent its last term trying(with a measure of success) to stuff as much debt into people as possible, many households are only afloat due to the absurd redistributionalist merrygoround of a suite of various benefits/tax credits to avoid the country having to confront the fact that housing is simply too expensive in the UK.

I suppose I could get a tracker type mortgage and overpay on it a fair bit..

How does the lag on the trackers work? Does it come into effect as soon as the BoE or the tracked rate increases/decreases?

Personally going for fixed because I like to know exactly what I’m on the hook for month to month.

Depending on your LTV HSBC have some cracking rates on low rate trackers for the life of the mortage.

As a First Time buyer I got 2.09% plus base rate for the life of the mortgage. If you have 70%+ LTV you can get that down to 1.69% plus base rate or 1.49% plus base rate at 60% LTV

There are so many variables – speak to an adviser. I was counted as a First Time Buyer for some odd reason, as there was a 6 month gap between selling on place and buying another. Seemed odd, but meant I had access to better deals ! A good independent mortgage adviser will sort you out. You can only overpay equivalent to one months mortgage payment IIRC – not sure if that is the law or just a common condition.

As a First Time buyer I got 2.09% plus base rate for the life of the mortgage.

Eh, so over 5 times base rate – or have I read that incorrectly?

Depending on your LTV HSBC have some cracking rates on low rate trackers for the life of the mortage.

As a First Time buyer I got 2.09% plus base rate for the life of the mortgage. If you have 70%+ LTV you can get that down to 1.69% plus base rate or 1.49% plus base rate at 60% LTV

We fit into the 60% LTV so I have been looking at the 1.49% + BR. We are HSBC Advance account holders so the set up fee is halved. We really want to stay with HSBC with our mortgage as they have been amazing with our current mortgages. Thankfully they have some good deals on now so it won’t be an expensive option.

They also have a 24hr mortgage promise – basically when we go in and say “yes we definitely need the cash for this house we’ve found” they only take 24hrs to confirm rather than the 2 weeks that it normally takes (apparently).

I was counted as a First Time Buyer for some odd reason, as there was a 6 month gap between selling on place and buying another. Seemed odd, but meant I had access to better deals !

The 6 month thing might happen with us but I am hoping not!

Currently at 2.59% overall at BoE 0.5% interest rates. Which for a first time buyer was 1.3% less than the 3.89% any other bank would offer me last year.

I can also vouch that the whole process once they had agreed how much they would lend me was relatively painless, including renegotiating the rate based on a lower LTV once they had already made me an offer and the rest of it required no input as my solicitor was on their approved list.

We’ve just fixed at 2.49% for 5 years and we’re happy with that. I was tempted to go longer, but the lack of flexibility for such a long period was ultimately off putting.

Mortgage companies are in this game to make money, if they are offering long term fixes at that rate they don’t expect to see base rates go up anytime soon. Or fast.

Hels overpayment is company specific.

I headline figure isnt everything. I pay slightly more on the headline rate but can pay significantly more in overpaymens which brings actual interest down much more than the best rates which generally come with a very low over payment clause

The HSBC Lifetime tracker has no over payment penalty at all.

I would speak to an adviser.
I wouldn’t assume rates will stay low tho. On the one hand, UK consumer will not be in a good place when they do as it becomes clear how bad our household debt is 95.8 as % GDP (greece is 70%btw)… on the other hand, there’s increasing noise that US will put rates up later this year, which we’ll have to follow whether we like it or not…

Mortgage companies are in this game to make money, if they are offering long term fixes at that rate they don’t expect to see base rates go up anytime soon. Or fast.

Obviously they are designed to be profitable but they hedge them in the swaps market so rate is partially an indication of where the market thinks rates will be, but the individual bank is generally largely disinterested.

Go and speak to an independent FA. Whatever you do don’t go to a bank and speak to them. They will just try selling you their products. Will depend on your circumstances and what they are likely to be further down the line. Most seem to think rates are only going to go up which is why we’re looking to get a 5 yr fixed. Like I said though get to an IFA as they will be able to work out exactly what is best for your circumstances.

Our fa just recommended a 5 year fixed at 2.44 for 5 years and no arrangements fees.

If you’re gonna have the ability to overpay regularly then getting a decent tracker and making sure you do overpay would be my choice. It’s what we did do in fact.

Now I’m not in a position where I can overpay much at all, but my monthly payments are low because I was a good boy when the cash was rolling in.

Went with First Direct FWIW and they have been lovely to deal with, both for the mortgage and our banking.

They will just try selling you their products.

Well they aren’t going to sell anyone else’s!

I’ve done a lot of research into mortgage providers and I know I might get a slightly better rate if I go with a different provider than HSBC who I would prefer to use. However I like to take into consideration the service I get and for various reasons HSBC have been amazing with us. It’s very convenient for us to go into the local branch and sort things out if necessary.

I will of course be shopping around but they are my preferred choice. Quick story – we got a quote from HSBC for our current house when we bought it but I got an independent mortgage advisor round to see what else was available. At the time he said he couldn’t beat what they were offering me and recommended that we go with them anyway!