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baserateisirrelevant

3yr Or 5yr Fix?

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Friend is re-mortgaging. I have plagued them to fix (convinced higher rates on the way given QE, Braun's spending plans, and a sterling currency crisis). The options are to fix at 3 yrs for 3.5% or 5 yrs at 4.5%. I think 5 years is better given my personal view on rates, but would be interested in thoughts.

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10 years imho

+1

I would take a lifetime fix if I could get one at the moment

10yrs seems to be the longest option and they are few and far between

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+1

I would take a lifetime fix if I could get one at the moment

10yrs seems to be the longest option and they are few and far between

Any ideas on a decent 10yr fixed product? The ones I have looked are with HSBC?

Also, a follow up question. Said friend has £40k to park (doesn't want to put into mortgage). I have advised 10k in index linked gilts, 10k in physical silver, 10k in a Singapore REIT, 10k in a agriculture commodity fund. Any comments guys?

thks

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+1

I would take a lifetime fix if I could get one at the moment

10yrs seems to be the longest option and they are few and far between

Brittani do 15 years, but at 6.2%

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Any ideas on a decent 10yr fixed product? The ones I have looked are with HSBC?

Also, a follow up question. Said friend has £40k to park (doesn't want to put into mortgage). I have advised 10k in index linked gilts, 10k in physical silver, 10k in a Singapore REIT, 10k in a agriculture commodity fund. Any comments guys?

thks

Offering financial advice is a sure fire way to lose friends when it goes wrong.

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Offering financial advice is a sure fire way to lose friends when it goes wrong.

+1

NEVER give them direct advice.

Just suggest what you might do if you were them, followed by something like "This is only my opinion, I'm no expert"

If the options are 5 or 3 years, go for 5. 10 would be better though.

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Be sure to check any exit penalties. Sometimes unforeseen relocation becomes essential (new job in different area, for instance) before the end of the fixed term, and early redemption penalties can be very large from what I remember reading in various financial advice columns over the years.

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only problem with 10 years is that it may severely limit the overpayment options. When my fix comes up for renewal, I'm probably going to leave half of it on the SVR and try and pay it off asap, and fix the other half for 5yrs (Maybe less depending on the difference between rates at 3yr/5yr).

Edited by Phil_Spencer

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I'd personaly gor for a base rate tracker with no tie in period or penaltys for early redemption, and then bail and get a fix when interest rates look like rising

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I'd personaly gor for a base rate tracker with no tie in period or penaltys for early redemption, and then bail and get a fix when interest rates look like rising

What do you think the rate is going to be when you bail? The banks will be one jump ahead of you.

75% of fix rate deals bank wins, to get amongst the 25% you have to be ahead of the curve.

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Friend is re-mortgaging. I have plagued them to fix (convinced higher rates on the way given QE, Braun's spending plans, and a sterling currency crisis). The options are to fix at 3 yrs for 3.5% or 5 yrs at 4.5%. I think 5 years is better given my personal view on rates, but would be interested in thoughts.

5 Years at 4.5% snap thier hands off !

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Any ideas on a decent 10yr fixed product? The ones I have looked are with HSBC?

Also, a follow up question. Said friend has £40k to park (doesn't want to put into mortgage). I have advised 10k in index linked gilts, 10k in physical silver, 10k in a Singapore REIT, 10k in a agriculture commodity fund. Any comments guys?

thks

There doesn't seem much point in holding out on putting the £40k into the house, when £30k of what you advise is also "equity", all except the Gilts... The only reason to hold onto the cash is as a hedge against deflation to make sure you can keep paying the interest and not get repossessed, if the house ever goes underwater.

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Gotta reiterate what others have said: financial advice and friendship are two things that often cancel each other out!

People have v different understanding of risk - tracker for one is a nightmare - fix for your friend could come back to haunt you - what if rates don't rise for a year? He/she'll be really annoyed on that 5% fix in 12 months, even if in the longer term it is a better idea!

sorebear

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That will look dirt cheap in less than 2 years.

amd so will the purchase you made, for the self same reason.

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I'd personaly gor for a base rate tracker with no tie in period or penaltys for early redemption, and then bail and get a fix when interest rates look like rising

The only trouble with that is that things moved very quickly on interest rates when they came down and I suspect they'll go equally is quickly when they shift back upwards. I think the 10 year fix at 5% is a sure fire winner as I'm guessing that (base rate) interest rates will be above 10% in a couple of years.

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