mortgage/home loan advice

[Mr I]

So;

I have until march 2012 left on my fixed rate mortgage until it reverts to standard variable rate. Its currently at 5.55% fixed.

I phoned the bank and they say to get out of the fixed rate will cost me £3,300 in penalty. But the thing is I could by my way out and get a tracker rate at 2.49% (or 1.99% over base rate, currently 0.5%) which would save me about £500 per month.

So if I did that and the base bank rates stay the same I will have saved money by the end of month 7 x 500 = 3500 Vs penalty = 3300

so on the face of it it looks worth doing if interest rates are gonna stay low for the next couple years. What do you guys think are interest rates gonna climb fast or no?

[ROCKETW19]

I did that same shit bro a few years ago. but when mine was gona go adjustable the rates were high. bad mistake by me. My dad always said get a fixed i laughed at him and said that is for old people get with the times. Well I paid 10K to get outta my loan and at the time couldnt of been happier. My new house is fixed for 30 yrs and I wont have it anyother way. I am just to scared to get caught in a high rate.
But totaly up to you it might work out just perfect I am just to much of a sissy after that last one.

[the art of war]

can't you refinance on a fixed loan anyway ? And get a diff loan cover your old one if rates drop ?

[Shibby]

I'm closing on a house Aug. 25th. We got a fixed rate at 4.75. My mom just got into real estate and has been working with a friend who has been doing it for decades. After this summer, the rates are suppose to be climbing back up, not fast but consistent, because of all the federal stuff coming to an end. I don't know how much that will apply to England though. We were going to wait one more year before buying, but then we found out that with the interest rates increasing, we wouldn't be able to get a better house. We would just pay more for the same quality house.

[Mr I]

The uk is quite tied with the USA and so they are similar. I personally can't see interest rates going up quick, the economy is too fragile and they know that. I'm just not rushing to hand over the money lol!

[ROCKETW19]

can't you refinance on a fixed loan anyway ? And get a diff loan cover your old one if rates drop ?

yes but loans are not free and some have peneltys especialy adjustable rates.

[the art of war]

yes but loans are not free and some have peneltys especialy adjustable rates.

so if i got a fixed rate - 10 years from now i can get like .. i dunno something in the 3s say (if that ever happened) - i would pay surcharges and shit then to switch up loans ? That sucks man, i hate debt /loans - i wish i had cash to just settle shit n be done.

[ROCKETW19]

so if i got a fixed rate - 10 years from now i can get like .. i dunno something in the 3s say (if that ever happened) - i would pay surcharges and shit then to switch up loans ? That sucks man, i hate debt /loans - i wish i had cash to just settle shit n be done.

No If you kept the loan for 10years all penelys would be gone by then. I am no broker but I dont remember any peneltys going longer than 3 years?
But you still would have to pay for the new loan but would be well worth it for a 3% loan

[the art of war]

it's honestly daunting looking at houses - I've never had more than a 24 month lease on a place - when I even think about houses, man , fucking intimidating cuz i always have done just cash to cash for everything in my life.

[redsquirrel]

All depends on the terms of the loan- what the penalties are. If there are penalties, most of the time they are just if you sell the property.

When we built our house 5 years ago, we got a 3 YR ARM @ 4.875%...we had every intention of selling before our fixed period expired....then the market crashed. The first adjustment, it went up to 5.125% (which was about 6 months before the crash), and this past February, it adjusted DOWN to 3.375%. So, yes- it is sort of a gamble. But, it can also help you. Our mortgage is tied to the LIBOR.

But, to be quite honest- I work for the largest bank in the world, and rates are not going anywhere in the next 6 months. Rates are lower now than they were last summer. We actually had to raise rates to help stave off application volume because we are so backed up. The global economy is the reason rates have continued to stay low, or even drop lower- which will take a long time to recover.

[Mr I]

Redsquirel, so yeah mine has a penalty can you see my opening post and tell me what you think, I can get a tracker that runs 1.99% over libor

[the art of war]

All depends on the terms of the loan- what the penalties are. If there are penalties, most of the time they are just if you sell the property.

When we built our house 5 years ago, we got a 3 YR ARM @ 4.875%...we had every intention of selling before our fixed period expired....then the market crashed. The first adjustment, it went up to 5.125% (which was about 6 months before the crash), and this past February, it adjusted DOWN to 3.375%. So, yes- it is sort of a gamble. But, it can also help you. Our mortgage is tied to the LIBOR.

But, to be quite honest- I work for the largest bank in the world, and rates are not going anywhere in the next 6 months. Rates are lower now than they were last summer. We actually had to raise rates to help stave off application volume because we are so backed up. The global economy is the reason rates have continued to stay low, or even drop lower- which will take a long time to recover.

rate of 3.75 is real good - can you get that at a fixed currently ? I've looked at a few places but again I feel like I need more stability before I get into a 30 year loan.

[Mr I]

Yo redsquirel, cmon fannie mae throw us a bone, are they pushing the sale of fixed rates at work because they think rates are gonnna stay low or are they pushing trackers cos they think rates are gonna move up in the next year?

[redsquirrel]

Redsquirel, so yeah mine has a penalty can you see my opening post and tell me what you think, I can get a tracker that runs 1.99% over libor

A couple questions you need to ask yourself:

1) How long do you plan to stay in the home? That should really determine what loan to go with.

2) If and when it adjusts to increase your payment, how will your finances look once that happens? Will you be strapped for cash, but still comfortable?

My loan is 1.5 over LIBOR, so about the same as you.

[redsquirrel]

rate of 3.75 is real good - can you get that at a fixed currently ? I've looked at a few places but again I feel like I need more stability before I get into a 30 year loan.

For a fixed 30 year mortage, best you can find right now is about 4.375% - 4.75%. If you plan to stay in the home for at least the next 15 or so years, it makes sense to buy that rate down even more with points. I think you can get like 4.25% right now with maybe 1 point??