So many variables!

How on earth am I supposed to be able to work out what I can commit to for the next 25 years?

Will I earn more in the future? Will I lose my job? Tracker, variable or fixed? 2, 5 or 10 years? Offset? Will they screw the economy over again and push interest rates sky high?

Argh.

I took out a mortgage recently and after going through the pain of the affordability tests it came back saying they minimum period they’d be willing to lend me what I wanted was 6 years. The guy from the building society seemed to think I’d seriously consider going for that and couldn’t understand that I wanted to take it over 20 years! I tried to explain to him that I didn’t regard things like eating etc. as optional…

Anyway I ended up going for a 2-year tracker as it was a fair bit cheaper over that period than any other option.

Biggest variable is the size of your deposit and the mortgage fees – for my first mortgage i fixed for 10 years for peace of mind.

Plenty of recent posts on this very topic.

FTR we went with a 5yr fixed at 3% about 9 months ago. I spoke with a few advisors beforehand and they each recommended similar.

Will they screw the economy over again and push interest rates sky high?

I’m guess your idea of sky high is nothing mine…

http://images.huffingtonpost.com/2013-06-14-42550YearsofUKInterestRates1963201301.jpg

Well in double figures for most of the early years I had a mortgage.

My idea of sky high is the sort of thing that cause my parents to declare themselves bankrupt when I was a kid.

Recently went for a 5 year fixed too. Too long fixed can tie you into your lender if you want to move again. Fixed seems like the safest option at the bottom of the curve, and it can’t get much lower?

All the advisers we saw recommended 2 year deals so we’d keep going back and give them another commission every 2 years.

FTB and just started a 25yr mortgage. Fixed at 2.49% for 2 years. Variable rate after that was base + 2.55%

I took a 5yr fix at 3% earlier this year, but I like to just forget about it 🙂

Banks employ teams of economists to speculate on what interest rates will do over time and price fixed rates to ensure they don’t lose out. If you think you know better than them then buy a fixed rate, but be aware that you are betting against the house.

My money however would be buy the most competitive product available to you and over pay as much as you can in order to hopefully weather whatever storm comes your way.

Mortgage rates are still coming down.

Coming down I can live with. I could almost come to terms with locking into something now and seeing it get cheaper. What scares the craps out of me is when it all starts climbing again. I don’t fancy seeing 15% again.

Strange in this day and age people still agree to borrow huge amounts of money and pay back larger amounts of money over a long peiod of time to buy a place to live, not knowing if theyll ever be able to keep up repayments, and if they miss repayments all that cash has been wasted on mortgage intrest and other charges.

Strange in this day and age people still agree to borrow huge amounts of money and pay back larger amounts of money over a long peiod of time to buy a place to live, not knowing if theyll ever be able to keep up repayments, and if they miss repayments all that cash has been wasted on mortgage intrest and other charges.

Or pay rent, for ever – and also face ever-increasing fees/charges/uncertainty.

Project, I agree it’s mad but as br suggests, is the alternative any less mad?

Either projects landed gentry / living in his hippie bus/commune /living in his box or living at someone elses expense

I worked out a long time ago its either be screwed over by a bank for a given number of years and live within yor means to ensure you can pay your mortgage for a few months/years should you lose your job. Or be screwed by a landlord for ever.

At least one wy you have a level of security an free reign to tailor to your needs .

I wish it werent so and i was going to win the lottery and e able to stick it to te man but the days of a coorporation house on the cheap died with my parents and their parents.

Went for a life time tracker in Nov 2008 at base + 0.82% much against the advice of the HSBC mortgage adviser. As such we had to sign a disclaimer form on behalf of the bank.

That sounds a good deal for that time, 18 months earlier I was very happy with base rate + 0.49% offset tracker; no idea when those deals will come again but perhaps when base rate returns to a sensible level over inflation.

Just missed out on the base + 0.74% and £599 fee! (Paid £799)

In exactly the same situation. In the end I decided that the 5 yr fixed rates were too high – I was paying too high a premium for relatively little security. And the shorter deals would leave me renegotiating every 2 years, paying more fees etc. So I decided on a tracker with an upfront fee to bring the rate down.

Given my record on making financial decisions you can confidently expect double digit rates before the end of the year 🙁

Interest rates going up?

I’m not sure I’d believe anything in The Telegraph but the sources they name like UBS and Credit Suisse should know what they’re talking about.

IMO mortgage rates are low at the moment because houses are unaffordable to most and the Bank of England tightened up lending criteria which means no-one’s applying for mortgages. There’s more than a few people expecting a crash and so they’re holding on for a few months rather than buying now.

In order to try and meet their lending targets in the face of falling customer demand, banks dropped their interest rates – the same as retailers drop prices when consumers aren’t buying…

With difficulty OP, with difficulty. A lot of housing is currently expensive on most valuation measures. The exception being cost of servicing mortgages. Why? Because, the gov are deliberately holding IR down at artificial levels and will probably continue to do so in order to shrink the level of debt – “financial repression”. So they deliberately force you to make a decisions that you would not otherwise do – amazing!

Just make sure that you are ok if interest rates normalise.

I’m not sure I’d believe anything in The Telegraph but the sources they name like UBS and Credit Suisse should know what they’re talking about.

I have a government source who is 99% right about these things. The advise to me was to watch out for year’s 2016/17. He said an exit from a fix /discount at current rates into the rates at that time would “significantly felt in our finances”, such as would outweigh the saving over a 2/3 year tracker and make a 5 year fixed cheaper (at 2.8%).

I took out a very big one on 0.49% above base in Jan 2007. Laughing. It’s flexible so I can pay it off when I want etc. so currently have all my savings (which is bigger than the mortgage) getting more than that (most sat in the same bank!!).

Just lucky though.

If you think you can predict future interest rates with more accuracy than a bank can, with all their experts, you are deluding yourself.

Just choose what you think you can afford. Who know, you might be lucky too….

C

Just make sure that you are ok if interest rates normalise.

There’s a million dollar question: what’s normal?

I have a government source who is 99% right about these things. The advise to me was to watch out for year’s 2016/17

Shame, our fix ends in August 2017!

no idea when those deals will come again but perhaps when base rate returns to a sensible level over inflation.

They will never come again, all the banks are too busy taking us to the cleaners with big fat margins – bigger margins than ever?

Same here, 0.49% above base for it’s life on most of mine.
Had to refinance one of my smaller mortgage sub accounts recently, & couldn’t believe the qualification process. Can only be a good thing though I guess.

I have a government source who is 99% right about these things

Shame the government don’t appear to listen to your source 🙂

Onzadog – good question. One tool is the taylor rule

http://termsexplained.com/135114/taylor-rule

But fell out of use recently!!! But easily 300bp or 3 percentage points above where we are now. The Gov knows the consequences – big defaults – so will be in no hurry. But the whole thing is a bloody mess. States messing about with interest rates to solve their past errors. Creates as many problems as it solves. Asset prices move away from reality for sustained periods which makes sensible investing very difficult.

Banks make lousy margins – that’s why they took on so much leverage to make a return..

takisawa2 – is yours First Direct too? They offerd me a facility (at base plus 0.49%) on £800k but sadly at the last minute only gave us what we owed on the previous mortgage.

I was hoping to put the surplus somewhere safe at 2%!!

C