Finalising my mortgage tomorrow. Still undecided whether to fix for two years or five years? Equates to £100 difference per month. Although after two years rates will inevitably be higher. Which one is the better option?
I'll just visit the future and fi...
Erm, £100 could be a little or a lot depending on your actual mortgage payment (e.g £100 extra on a £200 payment is a lot, £100 extra on a £1000 payment not so much...).
Personally we fixed recently for 5 years - don't know if it's the right decision but it means we don't need to think about fees for 5 years, and at that point we won't care as much as kids will be at school!
Basically, the decision depends on your circumstances and your attitude to risk...
General reckoning is once rates do begin to go up, they'll probably go from current 0.5% to 2.5% fairly quickly but unlikely to go up much from there.
But that was before it became clear that China is in a bit of a mess, which may change things somewhat. e.g. delay the rise as it's likely to have a significant impact on the global economy.
Mind you, with Canada now in a recession, Russia, Brazil both in a big mess, Eurozone going nowhere and UK dependent on consumer spending based on increased debt, you may have bigger problems than a few more ££ on your repayments... if you think your job will be at risk in the next recession (whenever that will happen) then certainty about your mortgage may be useful
Go for the cheaper one and save the hundred pounds a month. End of mortgage deal, make a payment on your mortgage balance of the saved amount.
..or buy a bike.
darrenspink - Member
Go for the cheaper one and save the hundred pounds a month. End of mortgage deal, make a payment on your mortgage balance of the saved amount...or buy a bike.
Probaly the best advise ever!!....+100
If you ain't broke, don't fix it. Or something.
Go for the cheaper one and save the hundred pounds a month. End of mortgage deal, [s]make a payment on your mortgage balance of the saved amount.[/s][b] stick it on red no black, maybe red or what about that 3 legged horse?[/b]
Fixing is paying to remove risk, what can you afford to risk? The £100 saved a month could be eaten up with rate rises (depending on size of loan etc.) later on if things change.
If you fix for 5 you could end up with £6k in the bank to overpay or cover rate rises or nothing.
Fix for 2 but put your payment at the 5yr level and watch the years slide right off your mortgage.
Well the 10yr mortgage I was coveting has been pulled so if that is any indicator I'd be going long term.
Rates are still better than they were 5 or so years ago so personally the extra paid to fix would be well spent.
Are there any arrangement fees? The norm for good rates is £1000 so that's a big chunk of the £100/month saving assuming you get another deal in 2 years. I'd be looking at the longer term fix.
Cheers for the help.
The 2 year is just under £800 whilst the 5 year is just under £900.
I do like the idea of knowing where I am so the longer fix may be beneficial but I'm not great on economic issues so didn't know likely hood and potential amount of interest rate rises. If I went 2 years would overpay but wouldn't make much difference!
I really can't see interest rates rising much in the next few years, the world economy is looking pretty under the weather right now. We'll be lucky to escape another recession in the next 5 years.
Interest rates are only going to go one way...up. It's just a question of when. So if you're going to fix in then fix in for as long a period as you can - why not 10 years?
But, if rates don't go up until mid next year or later then the extra cost of fixing in now will wipe out any savings you will make when rates start to rise.
So it is a decision only you can make.
Just fixed for 5 years at 2.49% with no fees.
Its bloody tough question...just going through the same ourselves but trying to decide whether to fix for 5 years or 10 (Why can'y anyone do a 7.5 year fixed so I could just compromise in the middle?). Personally I can't see the point in fixing for 2 years given the mortgage fee (don't want to be paying £500 to £1500 every 2 years) and I don't expect rates to rise much in the next 1 to 2 years but more in years 3,4 and 5.
We're looking at about a 1% difference in interest between the 5 and 10 year deals and doing our heads in trying to decide whether its worth the extra cost initially for the 10 year.
Remember to factor in the fees as well as the monthly payment.
Recently went to a 5 year fixed, apart from the peace of mind the fees for remortaging are pretty extortionate and by the time we factored them in the 5 year was a significantly better deal because it'll be at least 5 years before we have to worry about paying another loads of damn fees!
Just gone 5 years at 2.34% and it's saved me 10-15 a month. I won't spend it all at once. Good point about the fees, lenders will often offer to roll them into the mortgage which avoids paying them up front but costs you plenty over the long term, especially if you do it a few times with 2 year 'deals'.
One thing I'd say is that 10 years is a very long time. My life is unrecognisable from 10 years ago, so I'd be wary of such a long fix unless very settled.