I just cannot decide, do I go 2.49% fixed for 2 years or 3.49% fixed for 5.
I’ve talked at length to my financial advisor and done all the research my brain can cope with so am now turning to the font of all knowledge that is this forum.

Help sway me one way or the other please (or just ignore me as I’m a grown up and should make up my own bloody mind).

unless you have something major happening in your life that you want to make sure you’re not tied in to a mortgage lender then take the longer fixed product.

How much flexibility do you want? (Not a FA but just got me a mortgage so have had all the same chats!

3.49% fixed for 5 years; rates can only go one way, UP, as the property bubble expands.

PS where is this deal?

Do you have a secured job / employment that will last for more than 5 years?

If so 3.49% fixed for 5 years if you can afford to otherwise 2.49% fixed for 2.

What do I know I don’t even have a house. 😆

Many thanks for the replies and I tend to agree. Can anyone remember what the tracker and fixed rates were at the height of the housing boom?

Apologies also but I don’t have the paperwork to hand with the details of the 3.49%, I’ll have a look tonight.

If you can afford the extra payments, go for the 5 year fix for sure. Try not to view it as losing out if rates don’t drop. Alongside the stability, you also don’t have to mess about sorting a new mortgage after only 2 years!

I took out a 90% mortgage, and after 3 years with some capital paid off and house price increase I could switch to a new mortgage with a better rate based on 80% of the value of the house.

With a 5 year fixed rate I would have been locked in.

If you took the 2 year rate you could overpay by the difference to hedge against a subsequent rate rise.

That looks like a good deal….

Take the 5 year deal

If you do the 2 year, you may end up paying higher interest if the rates have gone up (which they probably will), but you’ll also have to pay another set of arrangement fees, etc. So that would probably knock out any saving you thought you were getting with the lower rate anyway

calculate the difference – then regard it as an insurance premium you can choose to pay.

Don’t forget to factor the fees to change rate on the two years!

I’d prolly take the 5 – but it depends how large your mortgage is as % pcm..

But if you take the 5 year then when it comes time to remortgage interest rates will have skyrocketed so much that the only mortgages will be unaffordable to you. Better to take the 2 year, then remortgage for 5 while interest rates are still reasonable.
Cos everyone say they can only go one way.
Disclaimer: I’ve had two mortgages in the last 15 odd years, and the time I locked for 5 years at 5.25 (2002 when everyone was saying interest rates can only go one way) I was cursing myself by the time a year was up.

It’s a lottery really. If you can get a nice 25 year fix I’d go for that.

Is there an election before your 2 year fix is up…yep…. Id be fixing for 5 my self

What are the fees? And are you planning on moving within 5 years.

2 year fix would have to be fee free to really make it worth while unless you are likely to move in which case you will have to port your 5 year fix or pay an exit penalty. Porting a mortgage is now much more difficult in the sense that lending criteria have stiffened up so relying on one lender to advance you more when you move may restrict you considerably.

If you are not moving and the fees are not high v the amount borrowed (say 2k on 200k) I’d go for the 5 year fix

Can anyone remember what the tracker and fixed rates were at the height of the housing boom?

Think ours was fixed at 5.69% taken at end 2007 / early 2008 at about the time the market was dropping (Luckily it was only for a couple of years)

Bloody hell, 3.49% 5 yr is a good deal right now is it? Only enquiring as we competed on a 3.09% 5 yr deal last month (75% LTV).

FTR I’d go with the 5 yr.

You should also be looking at the Redemption Penalties on both deals if you think that could be an issue – and RPs will apply if you find a better deal and just want to remortgage.

We had a mortgage with Northern Rock who were so rubbish that we considered paying RP of ~£3000 just to get shot of them…

Double post 🙁

I’d take 2 year. Re mortgaging after the period with same provider is free normally. Yes rates will go up at some point but I expect a slow increase. I don’t think their going to sky rocket. Bank of England also doesn’t expect a rise and any rise will be slow. Shorter mortgage periods are cheaper.

Check the advice on here. Some who locked themselves in for 5 years have been paying at least 1% over the lower 2 year deals. Then suggesting to do the same again just means they are going to pay 0.6% over current best 2 year deals. Not sound advice. If you buy yourself out of a mortgage your just throwing your money away. Shorter ones allow you to exit early after 2 years. 3.5%!is 1% above the better 2 year rates.

calculate the difference – then regard it as an insurance premium you can choose to pay.

That’s how I’ve looked at it in the past – security tax. But now I’m on Base + 2% (Nationwide BMR) I’m finding it difficult to want to go back to a fixed for a long period, I always seem to lose out..

Or you could go for the 2yr fix for flexibility but repay the monthly amount the 5yr deal works out at. That way you’ll be paying more capital to partially offset any rate increase.

Take the longer one, 2 years will go so quickly and you will be back here having the same conversation and paying the new product fees again.

My experience, having taken a mortgage 4.5 years ago, assumed rates could only go up so went 3 years fixed, rates didn’t go up. Am now just about 18 months into a second 3 years deal, I like the stability of knowing my repayments and the new deal I got was a much better rate than the original, plus at my ltv rate the fixed was all of a1% above the tracker.

I reckon you could risk the 2 years deal then get a new deal, this will be improved if you can afford to overpay too though.

The longer one looks quite good value versus the 2yr – an extra 1%. Also I think variable rate deals aren’t far off 2.5%-3% so the 5yr year fixed looks good value versus those too. Its about peace of mind rather than trying to save money IMO

BYW back in the day I got a 10% fixed, mates said I was mad. Mortgage rates went to 15%. I could have afforded the higher payments by the time they arrived but I was glad to be making the saving and my decision was driven by the fact I knew we could afford 10%. I am on variable now but will get a fixed as/when we buy a new place in the next 12 months.

All interesting advice and experiences, thank you.

As I expected the consensus seems to be either go for the 2 year or go for the 3 year, aaaah.

I’m leaning towards 5 year based on your experiences though, thanks for swaying me, I was really struggling.

I’m no expert and certainly not qualified to advise (all you other guys are CeMAP qualified right?) but i didnt think you were allowed to overpay on a fixed rate mortgage???

You are, but usually only a specific amount. Mine is up to 10% of remaining capital per year.

I’m no expert

Amen brother, you can, we do.

OP – we got a 2.69 fiver year (might be different LTV) but I’dmbe tempted to go for the 2 year just cos I don’t think the base rate will rise that much in that period (maybe .25-.5%) but then that’s total speculation.