Fixed Rates

[iLegallyBlonde]

Can anyone argue against why having a ten year fixed rate wouldn't ensure that somebody would be ok if/when there is a crash ?

[Warwickshire Lad]

Can anyone argue against why having a ten year fixed rate wouldn't ensure that somebody would be ok if/when there is a crash ?

They'd be protected as far as they're payments are concerned, which is a good idea of course. The downsides are :-

1) It wouldn't insure someone against losing their job, if they have a job which would be at risk from an inevitable recession.

2) Assuming considerable price falls, it wouldn't stop the buyer from going into negative equity if their initial deposit had been small.

But if they're sure they want to live in the same house for a very long time to ride it out with a recession-proof job then by all means take the plunge ...

I'll stick to a good value-for-money rental myself. None of that overpriced property s**t.

[sign_of_the_times]

Can anyone argue against why having a ten year fixed rate wouldn't ensure that somebody would be ok if/when there is a crash ?

yes, but I don't talk to trolls (knowingly)

[iLegallyBlonde]

yes, but I don't talk to trolls (knowingly)

Oh miss, miss I know the answer miss pick me if we're back in the playground I'll see you after school

[BandWagon]

It would protect the owner.

But because house prices are set at the margin, that they aren't forced to sell wouldn't stop the other houses in the same road plummeting.

They wouldn't escape negative equity.

[iLegallyBlonde]

It would protect the owner.

But because house prices are set at the margin, that they aren't forced to sell wouldn't stop the other houses in the same road plummeting.

They wouldn't escape negative equity.

Thanks

[frugalista]

Maybe a bit off topic but one thing I don't like about these 10-year deals is that it's not possible to overpay more than a certain amount without heavy penalties. i.e. the bank is guaranteed to get a certain amount of interest out of you.

This would be a bit of a pain if you got a lot of wage inflation, or came into an inheritance.

There's no good reason for them to be like this, I think the traditional 30year mortgage used in the US doesn't have this problem.

frugalista

[ʎqɐqɹǝʞɐɥs]

yes, but I don't talk to trolls (knowingly)

Is terrified a troll? Whats the evidence?

[Rachman]

Almost all fixed rates are portable, so you could move provided you took a mortgage at the same size. Allows you some flexiblity.

It means you don't get stuck in the same place for 10 years - as always read the damned terms and conditions. If you can overpay 10% of the balance and you end up with sky high interest rates (relative to today) that's not that much of a problem because you can earn the net amount elswhere..... - it's only a loser if they rise a bit but not by lots and lots.

[Yankee]

Maybe a bit off topic but one thing I don't like about these 10-year deals is that it's not possible to overpay more than a certain amount without heavy penalties. i.e. the bank is guaranteed to get a certain amount of interest out of you.

This would be a bit of a pain if you got a lot of wage inflation, or came into an inheritance.

There's no good reason for them to be like this, I think the traditional 30year mortgage used in the US doesn't have this problem.

frugalista

I would never take out a loan of any kind that had prepayment penalties.

I think such penalities are outrageous. :angry:

But that's just me.

[Rachman]

I would never take out a loan of any kind that had prepayment penalties.

I think such penalities are outrageous. :angry:

But that's just me.

It's about different products. For some people a lower rate for longer is a good idea. They can save money that way - especially if they know that their income's not going to rise or they won't have spare cash for a while so they save on the mortgage in the meantime. We all take what we think is the best deal, sometimes we win, sometimes we lose.

[ʎqɐqɹǝʞɐɥs]

It's about different products. For some people a lower rate for longer is a good idea. They can save money that way - especially if they know that their income's not going to rise or they won't have spare cash for a while so they save on the mortgage in the meantime. We all take what we think is the best deal, sometimes we win, sometimes we lose.

Not that ram phrase winners and losers again. How many times do we have to hear these word on these boards?

[Guest Winners and Losers]

Not that ram phrase winners and losers again. How many times do we have to hear these word on these boards?

How totally ENDLESS are you. Jeez, STFU.

[OzzMosiz]

Noone's mentioned the HUGE penalties on these 10 year fixes. If you need to sell up due to job loss for example, you get hit with 5% of remaining balance!

[Guest muttley]

Can anyone argue against why having a ten year fixed rate wouldn't ensure that somebody would be ok if/when there is a crash ?

For someone who's just taken a job in finance, you don't half ask some dumb questions.

I'd stick to Estate Agency if I were you.

[iLegallyBlonde]

For someone who's just taken a job in finance, you don't half ask some dumb questions.

I'd stick to Estate Agency if I were you.

Just arrived back to your cosy little bedsit have you, which dinner for one are you having tonight ?

[Guest Charlie The Tramp]

I would never take out a loan of any kind that had prepayment penalties.

I think such penalities are outrageous. :angry:

But that's just me.

I agree absolutely and think it should be made illegal. You borrow pay the interest while the debt is outstanding and if you wish to overpay or clear the debt at anytime you should not be penalised, after all they have their money back. Yes I know you sign an agreement.

But that's just me.

[Golden Shower]

Is terrified a troll? Whats the evidence?

He/She is not bearish beyond a reason and can probably tell by the economic and HPI data that a HPC is not occuring at the moment.