Owning your own home

Hi,
I'm hopefully buying a place with my partner in a couple months, first time buyers and all that. Already got a 2 year fixed mortgage lined up, but now wondering if doing a five year fix would be better given the risk of interest rates rising. Is anyone in a similar position having the same dilemma?

i think it is unlikely that interest rates will fall from where they are now (historic lows?). i would therefore go for the 5yr

A first time buyer mortgage might be at a terrible rate especially you have a high LTV. So even if the base rate goes up you may still be able to get a cheaper mortgage in two years' time when L will be down and the estimated V should be up.

It all depends on the actual numbers though.

Do five years, assuming you aren't worried about terms around early repayment.

In reference to the point above, I don't think first time buyers get any worse rates than anyone else. Lenders only vary rates on LTV as far as I am aware?

As others say, it depends.
If you're buying with a fairly small deposit and high LTV (10% deposit say) then, if the property value has gone up in two years, you may get into a more favourable LTV band and still get a lower rate even if rates overall have gone up.

If you're buying with a high deposit then that is less likely to be an issue.

It also depends on your appetite for risk and how financially resilient you are. Do you want that certainty of knowing what you're paying for the next 5 years or can you take the risk that it may be higher and may be lower.

Or is there the possibility of your circumstances changing and wanting to move house again before 5 years is up?

There's no definitive answer, you need to think about the pros and cons and your personal circumstances.

This, I regret signing up for 5yr fix on our first time buy a few years ago as we were able to over-pay and could have saved a bunch if we remortgaged at year 2. That said, there are much more concerns about inflation (and therefore risk of rates going up in the near term) now than there were then.

Same, 'Interest rates can only go up' in 2018. Hur. Is what it is.

Great. Our freeholder has decided to auction the freehold. From what I can make out from the solicitors letter it circumvents the right of first refusal thing as we have an equal opportunity to bid on it compared to everyone else.

Other flat owner doesn't want to / have the cash to buy the freehold. We're thinking of selling. Can't imagine the freehold being auctioned in a couple of months is a good look for prospective buyers :/

According to the auction bit here:

https://www.lease-advice.org/advice-guide/right-first-refusal/

You get the right to buy after the auction for the same price as the winning bidder.

csb when I worked in finance within a bank, I bet a work colleague in 2015 that interest rates would go down before they went up. stake was loser had to get a spray tan, winner picked the shade. wee fuck welched on the bet as well

In addition to all the other advice, is there any chance you might want to move in two to five years? Life can change significantly in 5 years, children, saving money, inheritance etc

Thanks, that's good to know. So now do we wait and see what it gets at auction, or offer the freeholder some cash now...

We might not own it in four months, but this is going to hang over any potential sale.

And don't forget to put a low-ball bid in yourself, in case you can get it for cheap that way.

Yeah it's just unknown if we'll be able to get it done before wanting to sell the flat. There's a lot we don't know about the process and the situation of the other flats in the building

Haha, that's exactly what we wont be doing! After the auction it's offered to us at the hammer price. I'm not going to bid that up!

Problem the UK has is that we have quite strong inflationary pressure that traditionally you would mitigate with interest rate rises.

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Thanks for everyone's opinions, it was really useful.

I don't get the increasing mood music around rate rises. my understanding is that the traditional rationale for rate rises is to move money in circulation from consumption to saving. that makes sense if there's too much cash chasing goods (i.e. a demand problem) but what we have here is a (temporary?) disruption to supply (i.e. not an overheating economy.) increasing rates now strikes me as a recipe for disaster, given the elevated levels of household indebtedness. and it won't just be a problem for those with mortgages, but also those with maxed out credit cards. if all you have is a hammer, I guess... but I'm not convinced

Wife’s pod/yoga place/ office just installed- waiting for the electrician to plug it in

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@johnnettles2
Looks good- who did it?

This is the company- we luckily got in just before the price rises
https://www.fikapods.com/

Nice.

Ah ace. Will email them as back up plan.

There's no definitive answer, you need to think about the pros and cons and your personal circumstances.

This.

We've got 5yr mortgages both times.

Mortgage #1: 5yrs was based on what we expected our life plan would be in terms of having a child - in particular remortgaging on a lower income, and the min time we'd stay in the house. Due to reasons there was only one mortgage provider for us. With the benefit of hindsight a shorter term would have allowed us to move to a lower rate earlier. However, we moved abroad for a bit and in reality it would be impossible to predict that and its timing, so it probably was the correct choice.

Mortgage #2: 5yrs was based on the negligible difference between 2, 3 and 5yrs and 5yrs being so low. However, we made sure there were no porting fees in case we move in the meantime.

Shiplap or feather edge for lean to cladding?

Also horizontal or vertical? I think i'm leaning to horizontal as it's a victorian property.