It’s awesome knowing my payment won’t change aside from maybe a bit more each year due to any potential tax increase!
How do you not panic realizing interest rates are rocketing and you’ll be priced out of your own home and you can see it coming and there’s nothing you can do???
Timing worked really well for us. Finished a 5 year term just before the larger rate rises. Broker was telling me to ride it out with a tracker and the inflation/interest rises will be short lived.
Nah, got a 10 year fixed rate at a rate that is around half the current BOE base. He just couldn’t understand that we’re fine with 10 years at a rate that might be even double the rate banks offer in say 2-3 years. Because we can afford it fine. The risk is low with the fixed rate, whereas the risk of a tracker/standard mortgage almost has to upper limit.
Also, if the rate actually came down to half our fixed rate it would potentially be worth the penalty to exit early. It’s still kinda win/win in the UK, but timing can screw you over.
aside from maybe a bit more each year due to any potential tax increase!
Also insurance increases.
Incidentally, my taxes and insurance are more than half of my total mortgage payment, and are responsible for it increasing something like 30% over a decade.
Part of your house is paid off in that time. All mortgages are structured so that in 30 years they are paid in full. So if in 10 or 15 years you need to refinance somehow it will be cheaper than financing 100% of a residence.
Imagine being 10 or 20 years into your mortgage and suddenly you can’t afford your payments anymore due to a rate increase. You have to sell the house and then try to find another one at the inflated rate and then start back from square one.
It’s awesome knowing my payment won’t change aside from maybe a bit more each year due to any potential tax increase!
How do you not panic realizing interest rates are rocketing and you’ll be priced out of your own home and you can see it coming and there’s nothing you can do???
What a shit system that must feel like.
It’s crazy in the UK too, where 3-5 year fixes are common. I’ve know folk who at renewal next year will be paying £500-£800 extra, each month.
My biggest impact has been gas and elec, which maybe added that amount to my annual bill. I can’t imagine the stress.
Timing worked really well for us. Finished a 5 year term just before the larger rate rises. Broker was telling me to ride it out with a tracker and the inflation/interest rises will be short lived.
Nah, got a 10 year fixed rate at a rate that is around half the current BOE base. He just couldn’t understand that we’re fine with 10 years at a rate that might be even double the rate banks offer in say 2-3 years. Because we can afford it fine. The risk is low with the fixed rate, whereas the risk of a tracker/standard mortgage almost has to upper limit.
Also, if the rate actually came down to half our fixed rate it would potentially be worth the penalty to exit early. It’s still kinda win/win in the UK, but timing can screw you over.
Also insurance increases.
Incidentally, my taxes and insurance are more than half of my total mortgage payment, and are responsible for it increasing something like 30% over a decade.
Part of your house is paid off in that time. All mortgages are structured so that in 30 years they are paid in full. So if in 10 or 15 years you need to refinance somehow it will be cheaper than financing 100% of a residence.
Imagine being 10 or 20 years into your mortgage and suddenly you can’t afford your payments anymore due to a rate increase. You have to sell the house and then try to find another one at the inflated rate and then start back from square one.
You’d have to be wildly irresponsible to have that happen. Theoretically you’ve paid off well over half of your house after 15 years.