soworriedaboutthis
New member
Hi all,
Long-time lurker and a first-time poster. As the title says I'm stuck between those two deciding rates/years. I'll lay out some background to clarify my circumstances and situation.
Background
I've been in a tough situation and separated from my partner, our house is sold and due to complete in early September. I want to move quickly and prefer to buy, rather than rent. My mindset is to fight through the shit storm and at least have a place I call my own for myself and 7yr olds sake. I start a new job next week. My current salary is 50k and my new salary is 72k. I have a limited choice of lenders available to firstly be able to go off my future salary and secondly borrow the amount I would like for the house that suits my needs and location.
I have secured an offer on the perfect property and AIP, I now need to figure out the best option between 2 & 5 years.
Advice
Given the state of things, the current market and the fact nobody knows where anything will end up I need to choose between the following:
6.44% @ 2yrs £1871pm | Secure a new rate @ 1.5yrs in. (Whatever the market dictates at the time)
5.79% @ 5yrs £1725pm | Early repayment y1-5%|y2-5%|y3-4%|y4-3%|y5-2%
My broker has been helpful and advised nobody knows the future and the decision effectively is up to me.
The main issue comes from two of my closest confidants, one who is a savvy Redditor and on UKPF every day and is adamant that 5 years is the way to go and how the situation is akin to 2008 but much worse and thinks the other confidant & banks are out of touch. The other is a mortgage underwriter who thinks 5 years is insane and I should go for the 2 years, who also commented that their CEO expects rates to drop next year due to just how unsustainable these rates are. They laugh at the fact I'd get advice from Reddit. Both are contrasting views and have some points.
I'm listening with open ears with the hope I can get some sound advice and reasoning on which way to go.
EDIT
Crunching some numbers, the 6.44% works out at £3500 more expensive over the two years, so effectively I would need the rates to drop enough at the end of year 2 to save more than £3500 on my new mortgage rate in year 3/4/5 onwards.
EDIT 2
Tracker could be an option also: Starts @ 6.19% £1815pm @ligerheart25 thanks for mentioning this.
EDIT 2.5
Even with my situation the best rates around were only 0.7% lower for the 2yrs and 0.2% lower for the 5yrs. Tracker was the best on the market.
EDIT 3
I think I should add some clarity to the 2008 comparison, he wasn't comparing the exact mortgage situation to 2008, his thought process was how the banks have been overleveraging on derivatives and creating an unsustainable economic situation - How 2008 happened is very different to what's happening now but the end result was an economic shit storm, so a 5 year seemed the most sensible option for that certainty. Big banks are greedy, shock!
LAST EDIT
Thanks for all the input, thoughts and personal opinions. I flipped between the tracker and 5-year ALOT and decided the 5-year fixed offers stability and security, so is the best option for me. I could easily see the tracker working out well but I could easily see it not going well. The state of inflation and the possibility of hyperinflation scares the hell out of me and as someone rightly pointed out is it worth gambling your home over as a single parent? it absolutely isn't! Ideally, we all want to min/max our money and have the perfect outcome but as we're all aware, none of us know the future.
In 5 years time, if rates hit 2% again (I be dreaming), life will be sweet having lived perfectly fine on 5.79% and I'll take the longest damn mortgage term I can.
Long-time lurker and a first-time poster. As the title says I'm stuck between those two deciding rates/years. I'll lay out some background to clarify my circumstances and situation.
Background
I've been in a tough situation and separated from my partner, our house is sold and due to complete in early September. I want to move quickly and prefer to buy, rather than rent. My mindset is to fight through the shit storm and at least have a place I call my own for myself and 7yr olds sake. I start a new job next week. My current salary is 50k and my new salary is 72k. I have a limited choice of lenders available to firstly be able to go off my future salary and secondly borrow the amount I would like for the house that suits my needs and location.
I have secured an offer on the perfect property and AIP, I now need to figure out the best option between 2 & 5 years.
Advice
Given the state of things, the current market and the fact nobody knows where anything will end up I need to choose between the following:
6.44% @ 2yrs £1871pm | Secure a new rate @ 1.5yrs in. (Whatever the market dictates at the time)
5.79% @ 5yrs £1725pm | Early repayment y1-5%|y2-5%|y3-4%|y4-3%|y5-2%
My broker has been helpful and advised nobody knows the future and the decision effectively is up to me.
The main issue comes from two of my closest confidants, one who is a savvy Redditor and on UKPF every day and is adamant that 5 years is the way to go and how the situation is akin to 2008 but much worse and thinks the other confidant & banks are out of touch. The other is a mortgage underwriter who thinks 5 years is insane and I should go for the 2 years, who also commented that their CEO expects rates to drop next year due to just how unsustainable these rates are. They laugh at the fact I'd get advice from Reddit. Both are contrasting views and have some points.
I'm listening with open ears with the hope I can get some sound advice and reasoning on which way to go.
EDIT
Crunching some numbers, the 6.44% works out at £3500 more expensive over the two years, so effectively I would need the rates to drop enough at the end of year 2 to save more than £3500 on my new mortgage rate in year 3/4/5 onwards.
EDIT 2
Tracker could be an option also: Starts @ 6.19% £1815pm @ligerheart25 thanks for mentioning this.
EDIT 2.5
Even with my situation the best rates around were only 0.7% lower for the 2yrs and 0.2% lower for the 5yrs. Tracker was the best on the market.
EDIT 3
I think I should add some clarity to the 2008 comparison, he wasn't comparing the exact mortgage situation to 2008, his thought process was how the banks have been overleveraging on derivatives and creating an unsustainable economic situation - How 2008 happened is very different to what's happening now but the end result was an economic shit storm, so a 5 year seemed the most sensible option for that certainty. Big banks are greedy, shock!
LAST EDIT
Thanks for all the input, thoughts and personal opinions. I flipped between the tracker and 5-year ALOT and decided the 5-year fixed offers stability and security, so is the best option for me. I could easily see the tracker working out well but I could easily see it not going well. The state of inflation and the possibility of hyperinflation scares the hell out of me and as someone rightly pointed out is it worth gambling your home over as a single parent? it absolutely isn't! Ideally, we all want to min/max our money and have the perfect outcome but as we're all aware, none of us know the future.
In 5 years time, if rates hit 2% again (I be dreaming), life will be sweet having lived perfectly fine on 5.79% and I'll take the longest damn mortgage term I can.