Mortgages

Yeah, now it's shit, but it's shit because of the UK system of short mortgages. Other countries
fix for the whole term with a moderate interest rate which protects people from becoming
speculators with a highly leveraged asset.

"UK is shitter than other places" shocker :D

Which countries fix mortgages for the whole term? Surely that would put banks off actually lending? Then again, maybe it would make only people who could afford mortgages get them (I'm looking at you, sub-prime USA)

I know of the US and Germany, heard about some other places in EU.

A mortgage allows a borrower a certain amount of time to pay off the loan. The most common amount of time, or “mortgage term,” is 30 years in the U.S., but some mortgage terms can be as short as 10 years.
https://www.rocketmortgage.com/learn/average-mortgage-length

as short as 10 years! Cultural differences in one sentence.

You're using the US as an example of how mortgages should be done? :D

Seriously though: what's the impact on fixed rates for the whole term? I'm curious. Does it mean far fewer people own?

Surely that would put banks off actually lending

the rates would just be closer aligned to 30yr borrowing / gilts rates which will move more slowly than the 2, 5, 10yr
e.g.
https://www.bloomberg.com/markets/rates-bonds/government-bonds/uk

we'd look at them over the last 15 years and think they were crap rates
and then over the last 6 months we'd think they were great

That is a short mortgage term by UK standards too. the term and the fixed rate interest period are different things

on that website it says:

Most fixed-rate mortgages will have a 30-year or 15-year term, though some lenders offer 20-year terms and others even allow borrowers to choose their term.

which I thought means the interest rate is fixed for those years?

Yeah the US has fixed for the duration BUT they also have annual property tax, which can be immense.

Yeah. In the US you can get a fixed interest rate for the whole term. So your interest rate is 5% for 30 years, payments are the same for 30 years, until the outstanding mortgage is $0.

In the UK we have similar mortgage terms (you have a mortgage for ~30 years) but the interest rate is only fixed for a short part of that. When the fixed interest period ends, you remortgage, but generally speaking the date of your final payment doesn't change. Your interest rate and payments go up and down roughly in line with the base rate when you remortgage

Not many people pay off their entire mortgage in 10 years in either country!

If you fix for longer you can still pay an exit fee if the rate tumbles. You're not fully locked in for the whole term.

It's all a gamble anyway, and the only ones who win are the house (no pun intended).

Not many people pay off their entire mortgage in 10 years in either country!

waves

Our broker offered us a 25year fix at a very similar rate to the 5 year one we accepted (here in the UK) obviously we expected rates to drop at some point so went for the 5year. More fool us!

Has anyone here taken out a commercial mortgage with a view to converting the property to residential? I’ve just bought a restaurant (had an offer accepted…) and will be converting it to residential. Just wondering if anyone knows the deal with how the mortgage would change when the usage changes. Presume it would be commercial mortgage ending with exit fees etc and then just taking up a residential mortgage. That’s what I would hope but these things are never so simple.

I will be asking the mortgage advisor this but it’s Friday evening and need to satiate my curiosity.

What's the word? I haven't given this any thought for ages but just had 'the letter' that ours is coming to an end on 31st July.

We're currently on 2.69% paying about 490 a month. Will need to stick with current lender because reasons. 5 year fixed is currently 4.58% @ 622, 2 year is 5.14% @ 662.

Not a huge amount in it tbh. Neither wonderful. But wait until closer to the date? ("only you know the answer to that cyoa").

5 year

enviable amounts

Any more takers before I apply for 5 years and hold it against Amey for the next half decade when interest rates plummet next month?

hold it against Amey

inb4 @chrisbmx116

you can book a deal 6 months in advance, you could have done this a few months ago and got one in before they started pulling products. book something now and then look at MPC meeting dates to see when they are and if you have time to get a deal. inflation has dropped but it was a ‘hold’ at the last meeting, it could drop at the next one.

Yep, have heard June etc but also August and also mystic meg said something too.
If I book in now how easy is it to change?

I bet you… oh. Oh.

Good to see rates down a bit though. We are currently on around 1.5% and it’s up next year, when I asked last we were looking at between 5-6.5%!

Does anyone think interest only mortgages are a smart idea?

there has to be an seismic event for them to plummet to sub 2% .. with the amounts you quoted the diff is only £480 a year, that buys you 'stability'

Thinking that rn for a 2 year term... but wondering how much of a challenge it is to get back onto a capital one with the same lender in 2 years time without going through any awkward checks.

Not expecting sub 2%, but if we could get monthly payment to top off at 550 instead of 650 that'd be a big monthly help for a currently single income effectively freelance house.