3 yr or 5 yr fixed rate?

[*rose]

we are in the process of looking for a mortgage for our self-build in the region of 200-250,000. we have been advised to fix it for the first few years by a few lenders but are unsure of what to do. would we be better fixing it for 3 or 5 years????

looking at rates at the moment and ebs are better for a 5 year and first active are better for a 3 year fixed rate so dont know what would be best.

any advice appreciated !!!!

 

[ClubMan]

Re: 3 yr of 5 yr fixed rate?

Don't expect a lender (who has a vested interest in making as much money out of you as possible) to recommend the best deal to you. Only fix if you really need to - i.e. are hard pressed to meet the monthly repayments or might be if rates went up a few percent. Otherwise go for the most competitive tracker/variable rate available to you. You will most likely pay a premium on a fixed rate for the peace of mind of fixed repayments and they are inflexible (e.g. penalties if you want to make capital repayments or move to a new house). There are lots of threads on the general fixed versus tracker/variable question.

 

[oblib]

Re: 3 yr of 5 yr fixed rate?

Rose - I am searching for a mortgage as well and I think I have settled on a 5 yr. fixed. I know it might be a bit more expensive but the way I rationalize it is that we are at the threshold of what we can afford. In three years our situation may not be a whole lot different in terms of our careers and earning potential but by 5 years I'm hoping things will have changed for the better a bit more.

Not sure if this is like your situation but In mind being able to sleep at night knowing I could always make the payments on my home was enough for me.

 

[*rose]

thanks a million for advice. so unsure what to do!!!

we will be building the house for at least a year before full mortgage is taken out so not sure what best thing to do is. all the lenders are advising fixing for a few years.

have to make decision over the weekend so any advice from a self-builder appreciated!!! thank you!!!!

 

[ClubMan]

all the lenders are advising fixing for a few years.

Don't expect independent, professional advice in your best interests from somebody with a vested interest in selling you something and making money off you. If you are in doubt then contact an independent broker for advice.