bridie

If you were about to take out a mortgage would you go for a fixed or variable interest rate?

If we move we will need to borrow an extra bit of money, I'd worked our figures out on fixed for five years as by then our daughter will be at school and I will be able to work more hours so we can overpay our mortgage at that point.

BUT if we did variable rate the repayments are less so we'd have a bit more to play with each week, and be able to save a little extra.

So, I just wondered what everyone reckoned, out of interest

steve99

I'd go variable, if fixed rates were around 3% lower id go that route, but not where they are at present.
Either way id say the most important thing is to get an offset type mortgage so any other money you have is working to counter the interest, one where ideally you link in credit card, current account, savings etc.
With the facility to overpay and redraw etc.

If you do go down the fixed route, make sure your not tied in and can get out of it before the end of the term if you need to (things have a habit of changing...) without any hefty charges to do so.

AndyR1976

At the moment I would be getting a fixed rate (personal opinion). btut only for a couple of years

I work close to the property industry (town planner) and have some friends in the field as well as friends/colleagues in the finance industry (including one who is a very good mortgage broker).

Interest rates are on the rise (well, they have been for 12 months) and the way things are goign they are expected to be another 4-5 more interest rate rises over the next 12 months. Into 2009 I think things will stabilise with a levelling off of interest rates and perhaps falling late 2009-2010.

I'd go for a 2-3 years fixed rate deal and then re-assess after the 2-3 years.

Having said that, the worlds property market is a fickly beast - who knows what may happen...

Vim Fuego

Both.

king kong

I think it depends on what your job is .If you are in the construction trade like me then you may find a fixed mortgage [if the rate was fairly low]would suit because it is one of the first trades that goes tits up ,so as long as you havent borrowed too much and you have the security of a fixed rate then you can look at doing a lower paid job to meet your mortgage repayments .
On the the other hand when interest rates drop below you fixed rate you will be able to pay because the building trade will pick up .You will be a bit pisssed off with maybe paying more than the bloke next to you for the same mortgage but you have to remember the peace of mind when things start getting tough .

worzel

You pay more for a fixed rate. So if you are running very close to the wind financially and could not afford to pay more it might make sense. But if you can absorb a bit of movement the variable will average out as less over the course of a mortgage.

bridie

Good point, hadnt thought of that.

OHs job is ok, set money coming in basically the same every fortnight give or take (depending on overtime)

Mine is freelance, so some months I have next to nothing, others are much better.

king kong

Agreed ,its a bit like insurance .If you can afford to be without it dont bother otherwise get it . A fixed rate is insurance for 3 -5 years of knowing what you got to aim for every month .

king kong

My personal opinion is the interest cycle is on the up but i dont beleive it will go up much more than another 2% before you will see major problems in the domestic economy ,so i think fixing now may be too late .Fixing 18 months ago would have been a good idea ,benefit of hindsight i suppose .

MartinH

We have two-thirds variable and one-third fixed.

The variable is a salary crediting offset account.

Works for me

bridie

Not hindsight as such... we didnt want to move 18 months ago