mortgages

[munchbunch]

What is the best type of mortgage i can get that is safe and reasonable many people have said fixed rate ???

[Didwot]

Whether you think a fixed rate mortgage is a good idea depends on whether you think interest rates will go up or down, If they go down then you will find yourself fixed at too high a rate, whereas if they go up you will make a saving. Personally I think the next rate move is likely to be downwards, but I could be wrong.
There are some good deals to be got on the High Street, and it is easy to check various Building Society/Bank offerings on the internet.
It is said that fixed rate mortgages enable you to know exactly what your outgoings will be. This can be very helpful if interest rates are volatile, but they aqre not volatile at the moment, and it is no comfort to have been able to predict the rate of payments a year or two ahead, if that rate turns out to be too high. Personally I would go for a variable rate mortgage, but I could be a fool.

[nuoyg]

I think it depends on the individual situation munchbunch.  For example, when I bought my home - as I was a first time buyer - my financial advisor said to take a fixed for two years rate as that way I could plan my monthly outgoings.  For me, I am finding this works well as I like to know where I am.   If a person isn't used to paying a mortgage, for the amount per month to go up and down from month to month, it could be a bit unnerving. 

I guess as well it depends on how much you earn and how much you're borrowing.  From my experience, I definately benefited from speaking with an independent financial advisor. 

[Hammer]

A fixed rate mortgage will have the expected rate changes built into it, so if the 'experts' at the mortgage company think rates will rise in the next couple of years then the rate will be higher, and vice versa.

It's unlikely that you'll be a winner with a fixed rate mortgage, as said previously it appeals to people who like to know exactly what they will be paying each month.

Personally, I would go for a variable rate as the next movement is widely perceived to be downwards.

[Oneeyedvic]

It is purely down to guess work what the rates will do. Personally, i fixed my rate last year for 5 years. Although I realise now that rates will in all likelihood go down in the next couple of months, at the beginning of this year you would not find one analyst that would have predicted that.

At a recent (2 months ago) conference, an economics advisor for NatWest indicated that rates would rise by a quarter and then drop by a half percent by the end of the year. That 1/4 percent rise looks unlikely.

I also know of people who bought houses when rates were at their lowest but once they came out of their fixed rate period (2 years) they couldn't afford their repayments easily.

Personally speaking (and it all is a matter of opinion not fact), I would be happy to fix for the full term of the mortgage. It takes all the guess work out, and you know you should always be able to make your repayments (if not sacked etc). If you take a variable rate, do bear in mind that although rates are widely expected to decrease, they can always increase.

 

If you do decide to fix, you can fix for 2, 3, 5, 7, 10, 15 & 25 years.

Further bear inmind that there will be early redemption penalties, so if you are expecting a windfall or if you are looking at downsizing your house etc, this may not be a good idea.

Hope this hasn't confused you too much

[woofgang]

we have a fixed rate that "unlocks" every 4 years, you can then choose the next fixed rate or go to variable, we have always been winners!!

[Craftyginger]

I have read some of these answers with great interest. It is important to get answers and advice on financial matters like this which is likely to be the biggest commitment you will make in your life, from those qualified to give the advice, which I am. Even so, what is 'safe' for you might not be for somebody else and so I would urge you to speak with a local financial/mortgage adviser. It depends on how often you are likely to move house, the term of the mortgage, inflation, whether we join Europe (interest rates in Europe are 2%!) tie in periods.....it's endless. One fact is certain NOBODY can predict what future interest rates will be. Please see an adviser.