Fixed rate mortgage dilemma
Posted by: hungryhalibut on 08 November 2007
Our current five year fix at 4.99% is coming to an end. Nationwide's best fix is currently 5.63% for five years with no fees. Alternatively it's a tracker at 0.34% over base.
Which way would you go?
Nigel
Which way would you go?
Nigel
Posted on: 11 November 2007 by halibut
for what it's worth nigel with so much in the air on interest rates why not hedge your bets a bit....split the loan in 2 one on a tracker and one fixed with the lowest fees.
richard
richard
Posted on: 11 November 2007 by Trev
Nigel
Have you considered a capped rate?
This has the benefits of tracking the base rate up to a cap; the maximum you will pay is the capped rate.
This gives you the advantage of benefitting if rates fall and you know the maximum you will pay if rates rise
Trev
Have you considered a capped rate?
This has the benefits of tracking the base rate up to a cap; the maximum you will pay is the capped rate.
This gives you the advantage of benefitting if rates fall and you know the maximum you will pay if rates rise
Trev
Posted on: 11 November 2007 by KenM
I'm probably in a minority here but I think that interest rates will rise in the medium (3-5 year) term. Central bankers recently seem to have been relatively unconcerned about an economic slowdown, but terrified of an increase in inflation.
You might also consider that banks and building societies have a financial interest in high prices and interest rates. So they will try to talk up the market.
Ken
You might also consider that banks and building societies have a financial interest in high prices and interest rates. So they will try to talk up the market.
Ken
Posted on: 11 November 2007 by halibut
quote:Originally posted by Trev:
Nigel
Have you considered a capped rate?
This has the benefits of tracking the base rate up to a cap; the maximum you will pay is the capped rate.
but in this environment you'll pay for the 'embedded option'....as i maintained previously the cheaper way to go is to divide your comittment.
This gives you the advantage of benefitting if rates fall and you know the maximum you will pay if rates rise
Trev
Posted on: 11 November 2007 by northpole
**Don't take my advice 'cause I know nothing about the markets!**
However, the last two times my fixed rate has come to an end, the general market predictions were wrong. I am convinced of one thing only - nobody knows!
I only have a few years left to run on my mortgage and recognising my aversion to risk I went for a fixed rate. One thing which I discovered was that coming near the end of my repayment period, the monthly payments were not greatly affected by minor differentials in interest rate and Nigel may be in a similar situation. In which case, a fixed rate is wonderful - sign up to it and worry not a jot for another 5 years! Just be sure to read my warning at the top of this message before proceeding!
Peter
However, the last two times my fixed rate has come to an end, the general market predictions were wrong. I am convinced of one thing only - nobody knows!
I only have a few years left to run on my mortgage and recognising my aversion to risk I went for a fixed rate. One thing which I discovered was that coming near the end of my repayment period, the monthly payments were not greatly affected by minor differentials in interest rate and Nigel may be in a similar situation. In which case, a fixed rate is wonderful - sign up to it and worry not a jot for another 5 years! Just be sure to read my warning at the top of this message before proceeding!
Peter
Posted on: 15 November 2007 by Howlinhounddog
Just when you thought it was safe to jump OUT of the water 
[URL=http://news.bbc.co.uk/1/hi/business/7094208.stm][/URL]
Honestly who knows
[URL=http://news.bbc.co.uk/1/hi/business/7094208.stm][/URL]
Honestly who knows
Posted on: 15 November 2007 by count.d
quote:quote:
I used to agree with this advice until recently. I took advice from one (as I always do), then did my own research on the net and got a far better deal.
Hardly surprising if you're not paying for advice by going direct is it? Bit like going to a hifi dealer, demoing their equipment, listening to their advice and agreeing a way forward and then buggering off to buy it on ebay 'cos it's cheaper...
I also use my financial advisor to advise on other products such as pensions. On the night she advised me and my partner about our mortgage, she also advised to switch our three pensions, which we did, making her £1,200 commission for a couple of hours work. Taking this into consideration, I would have thought a decent FA would advise me on what mortgage was best for me and not what mortgage was best for me and would also make her another tidy sum.
The point I was trying to make was, that if you do your own homework, you can save money and not have to rely on biased advice.
The internet has killed many careers.
Posted on: 15 November 2007 by Tarquin Maynard - Portly
quote:Originally posted by count.d:
. On the night she advised me and my partner about our mortgage, she also advised to switch our three pensions, which we did, making her £1,200 commission for a couple of hours work.
You dont say how much her work is expected to save you. Also worth mentioning that the commission payable to the adviser is not profit, just as the price you pay for any goods or servies is not profit.
She will be liable for the advice she gave you until after she retires and if the Government decide in future years that advice that is perfectly reasonable today is not reasonable in the future, she will have to compensate you.
Look at all the guff surrounding endowment mortgages; nothing wrong with them in general when tyhey where sold, but the Got retrospectively changed the rules and thousands of people claimed for "misselling" - unable to rememeber anything about the meeting except "I clearly remember we where told it would definitely pay off the mortgage".
Plenty of liars there, btw.
Regards
Mike
( not an IFA.)
quote:The point I was trying to make was, that if you do your own homework, you can save money and not have to rely on biased advice.
The internet has killed many careers.
Get it wrong and you only have yourself to blame.
Posted on: 16 November 2007 by hungryhalibut
I've been back to speak to Nationwide, who are quite happy to keep the offer of a new fix at 5.63% open until late January - the current fix finishes on 31 January. If they issue a better fix before then I can have that, or if rates fall by then and a tracker looks better, I can have that instead. They are being really helpful - in fact I am amazed how flexible they are being. At least being in the local government pensions scheme means I'd be hard pressed to do better elsewhere on the pensions front - so no need for financial sdvisers for me!!
Nigel
Nigel