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I don't sleep, I just dream.
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So, I'm looking at mortgages. Most are fixed rate for 2 or 5 years, which is nice and clear, but then after that ( on a 25 year mortgage) they go to variable rate. This is what is concerning me. The variable part seems uncertain. If a variable rate mortgage is 4% for example, does that mean it can go up as well as down? What happens if it goes up a lot? Will I will have to pay a lot more? Cheers.
 

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Non Nissan Note Driver
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So, I'm looking at mortgages. Most are fixed rate for 2 or 5 years, which is nice and clear, but then after that ( on a 25 year mortgage) they go to variable rate. This is what is concerning me. The variable part seems uncertain. If a variable rate mortgage is 4% for example, does that mean it can go up as well as down? What happens if it goes up a lot? Will I will have to pay a lot more? Cheers.
Just remortgage come variable rate time.
 

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You basically never want to be on the variable rate. Not because it's "variable" because it's sh1te!

You only end up on the variable rate when you come out of a "discounted" "fixed" or "tracker" rate period.

You should always renew/find a new deal before you end up on the variable rate.
 

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Yes it can go up quite a bit.

My first mortgage year's ago went from around 10% up to 16% for a while.

If you're mortgaged up near your financial limit (never a good idea) and the rate goes up, you either try to earn more, overtime, 2nd job. Or you could extend the term so say from 25 to 30 year's
 

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My first mortgage year's ago went from around 10% up to 16% for a while
Now there's a blast from the past that I remember well. Mortgage interest rates that were so high I could of ended up homeless. Only paid thirty eight grand for the house in the first place. How times have changed.....
 

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A variable mortgage will follow the current base rate plus a percentage.

So the most important thing is the additional percentage levied on your mortgage.

My mortgage was base rate +0 .25 % which was an excellent deal until Prudential decided to rip me off approx £23000 due to the crash in 2008, I had an endowment mortgage which should have been the ideal choice had the banks not decided to shaft the country and the Government to then bend over and bail the cnuts out.

My endowment "fell short" by £23000.

So with an interest only it will be base which is currently 0.1% plus whatever the lender want to charge .

Mortgages have to be much more flexible these days so it should be easy to swap to a better deal if the one you choose turns out to be unsuitable .
 

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As @sean m says it can go up and probably will within 10 years. What we're paying at the moment for mortgages is dirt cheap.

I remember one mortgage was going to be about 5% when the intro offer ended. Went with variable as the economy looked like it was to tank. Ended up paying £86 quid a month on an interest only buy to let mortgage. So definitely won that bet. Prior to that we'd been paying about £500 quid before the interest rates plummeted.

One of mine will be up for renewal soon. I'll probably fix for 2 years, then look to fix it for 5+ years, expecting the interest rates to rise.

Some tips that some people don't realise, most long term fixed mortgages will let them take them to a new property. Usually some penalty clause as long as you have a pound left to pay by the end of your fixed term, no penalty to pay but doesn't have to be on the place you originally buy. You also need to take into account when it's remortgage time, they'll probably try and charge you around 1k for the new mortgage and ask if you want to add it to your total. Make sure you do the calculations before accepting this as the first 5-10 years, on a repayment mortgage you're pretty much just paying interest and very little capital. Which leads to the final point, over payments on a 25 year mortgage are a very good idea. More so when interest rates are 4-5%.
 

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Now there's a blast from the past that I remember well. Mortgage interest rates that were so high I could of ended up homeless. Only paid thirty eight grand for the house in the first place. How times have changed.....
£30k sound's cheap but the wage of the day was just as low.

It's just a [email protected]# that those of us who paid that level of interest now get 0.1% on our savings, [email protected]#ed at both ends .
 

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A variable mortgage will follow the current base rate plus a percentage.

So the most important thing is the additional percentage levied on your mortgage.

My mortgage was base rate +0 .25 % which was an excellent deal until Prudential decided to rip me off approx £23000 due to the crash in 2008, I had an endowment mortgage which should have been the ideal choice had the banks not decided to shaft the country and the Government to then bend over and bail the cnuts out.

My endowment "fell short" by £23000.

So with an interest only it will be base which is currently 0.1% plus whatever the lender want to charge .

Mortgages have to be much more flexible these days so it should be easy to swap to a better deal if the one you choose turns out to be unsuitable .
Been there, endowment mortgage will pay off the house, and provide new car / big holiday. Changed to will only cover half the value of the house. But the banks offer a "top up endowment "..

[email protected]# right off with that.
 

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£30k sound's cheap but the wage of the day was just as low.

It's just a [email protected]# that those of us who paid that level of interest now get 0.1% on our savings, [email protected]#ed at both ends .
Stick your savings into property. Take advantage of the low interest rates while getting a much better return on whatever capital you have sitting in the bank earning fk all.
 

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Stick your savings into property. Take advantage of the low interest rates while getting a much better return on whatever capital you have sitting in the bank earning fk all.
Recently sold a 2nd property as want to be in the financial position to walk away from current relationship with the cash available to buy another house, without the delay of selling the one we share.
 

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Recently sold a 2nd property as want to be in the financial position to walk away from current relationship with the cash available to buy another house, without the delay of selling the one we share.
Couldn't you have remortgaged the 2nd property to get some extra cash if needed ?

I hate selling property. Biggest mistake of my life selling a couple of investment properties for tens of thousands in profit that I really could have quite easily held onto.

that are now worth hundreds of thousands more today.
 

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Couldn't you have remortgaged the 2nd property to get some extra cash if needed ?

I hate selling property. Biggest mistake of my life selling a couple of investment properties for tens of thousands in profit that I really could have quite easily held onto.

that are now worth hundreds of thousands more today.
Just like the feeling and simplicity of having the cash available.

Then if I do leave either buy another or just go rent somewhere hot near a warm ocean are both easy options,

Just looking into the amount needed in the bank for retirement visa in Oz / New Zealand
 

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I remember back in the early 80's there was a time when variable rate mortgages went up to 18%! They were going up every month and me and the missus were just student nurses then. It was fvcking terrifying opening letters from the bank each month telling us how much it was going to cost the following month.
 

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That's a tracker rate .

The variable rate is the sh1te the mortgage co give if you're outside of any deal period. It's usually 2 + % above what you should be paying.
Oh right , wasn`t such a thing as a tracker when I chose my mortgage , choice was endowment or interest only IIRC .

Mine then turned into an offset mortgage; not sure if they still exist.

One thing that has improved vastly with mortgages is the degree of flexibility , not that I trust banks at all these days having been ripped off.
 

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I remember back in the early 80's there was a time when variable rate mortgages went up to 18%! They were going up every month and me and the missus were just student nurses then. It was fvcking terrifying opening letters from the bank each month telling us how much it was going to cost the following month.
Oh yes, the whole negative equity nightmare.

Thankfully that is all a thing of the past for me now.

Cant trust a fat banker further than one can throw them.
 
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