My son and his partner are first time buyers in the South East (UK) and have been offered a 5 year fixed rate mortgage borrowing £142K on a purchase price of £152K. The offer is with HSBC. Can anyone please advise if this is a good way to go as a first time buyer and is a high street bank a competitive source to borrow from? Also, pros and cons of a 5 Year Fixed Deal such as this? Thanks in advance!
2007-03-11 01:01:32 · 5 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
TJ ... 5 year fixed rate means the fixed rate of interest on the capital loan of £142K for the first five years ... the mortgage term will commence at 30 years. After five years the interest rate will resume to the normal variable rate.
2007-03-11 01:14:01 · update #1
The type of mortgage taken depends on many factors like the intent of the buyers for the house. Are they planning to sell it or stay on it long term. Are they salaried people? Would their salary expected to go up from year to year to cover the expected rise of the mortgage payment once the 5 year term expires?
If both of them have excellent credit rating, then shop around, don't take the loan officers word... they are paid on commission so they are not looking out for your son.
2007-03-11 01:55:40 · answer #1 · answered by McDreamy 4 · 0⤊ 1⤋
1. whether its a good rate depends on whether you can find another lender who will offer a lower interest rate. shop around. there can be wide differences among lenders and you might save some money there.
2. pro of 5 yr fixed is that your interest rate wont rise in 5 years. First time buyers frequently move or sell within 5 years, so the savings on a loan with only a 5 yr fixed rate versus a loan that is fixed for 30 years at the start may be useful.
The con is that if they decide not to move or sell within 5 years, they have the risk that interest rates will be higher when the loan resets, or they refinance their loan.
good luck.
2007-03-11 09:31:55 · answer #2 · answered by Anonymous · 0⤊ 0⤋
5 years fixed is good if he wants stability by that mean if he wants to know what he will pay every month for the next five years.the problem is he will have a penalty charge if he finishes the contract early.this can be very exspensive ask the morgage lender how much, it is its normally thousands. i know alliance and lester, and nationwide are doing really good deals especially if you have 10% of what you want to borrow your son would need 15200. definatly go to a independant morgage advisor they will find you the best deal and its free advice.i dont recommend above a 3 year fixed.
2007-03-11 11:23:24 · answer #3 · answered by NICOLA G 2 · 0⤊ 1⤋
Well, fixed rate is good, but 5 years? That means they will be paying back near six thousand pounds a month. Do they have that kind of cash?
2007-03-11 09:10:59 · answer #4 · answered by T J 6 · 0⤊ 1⤋
HSBC is competitive. Also try on line loan sources by using the websites listed here. to do further research. http://www.google.com/search?num=50&hl=en&safe=off&rls=DMUS%2CDMUS%3A2006-47%2CDMUS%3Aen&q=uk+home+loan&btnG=Search
2007-03-11 09:09:19 · answer #5 · answered by chimneygod 3 · 0⤊ 1⤋