Mortgage – 2 or 5 yr fixed and lower % higher fee or vice versa?

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  • Mortgage – 2 or 5 yr fixed and lower % higher fee or vice versa?
  • prawny
    Member

    I’ve jsut redone mine. Gone for 5 year fixed, realistically, it’s not going ot get any cheaper so might as well fix for as long as you can.

    Fee’s wise, you need to add up the amount of difference per month over the fixed period and compare it to the fee. If it costs you more over the 5 years than the fees are you might as well pay the fee, as long as you’ve got the cash to pay it. I went fee free, it wasn’t a fat lot of difference at the end of the 5 years, and I didn’t have £650 lying around.

    caveat, I’m not a mortgage advisor, this is just what I did.

    dirtycrewdom
    Member

    Is there definitely a remortgage fee?

    The mortgage I’m currently looking at has an 2 year fixed rate mortgage of 2.12% with not arrangement fee, and it goes up to 4% after the fixed term. I may change mortgage, sell, or keep the same mortgage, will just wait and see. Am only after a £90,000 mortgage though with 50%LTV so that may affect it.

    wobbliscott
    Member

    THe last 5yr fixed rate I got had 3 options where you could flex the interest rate vs. the buy-in fees/up front charges. I worked out that over the 5yrs it was cheaper to go for the higher interest rate. However, assuming you’re going for the same monthly payment, then if you pay the upfront costs and go for a lower interest rate, then over that 5 yrars you’ll pay more of your capital off (assuming a repayment mortgage) as less of your monthly payment will be going towards interest. Depends if you want to cash in the lower interest rate to lower monthly payments.

    tonyd
    Member

    We’re in the process of taking out a 5 year fix. I’d agree with your thoughts that in a couple of years time rates will either be higher or on the way so decent deals will be hard to find. I don’t think rates can realistically go much lower than they are now so a 5 year fix was a no brainer for us. YMMV.

    Regarding fees, we wanted to pay up front but the IFA suggested we put it onto the mortgage for now, then pay it straight off when our purchase completes. That way the fee only applies on completion so if for some reason the purchase falls through we won’t have to pay it.

    Edit: Just realised you’re remortgaging so the fee part probably isn’t relevant

    bland
    Member

    Thoughts please and correct me if im wrong

    In 2 yrs time i suspect that the jobless figures will have improved or been fudged by the government to allow interest rates to rise as they can now just get away with saying well its not down to us etc and they are clearly itching to get them up. So in two years time interest rates will either be very close to rising or have already risen so deals will have gone up on the % front???

    At the moment i can get a 2yr fixed at 2.54% or 5yr fixed at 3.34% (based on fee of £845 or knock 0.1& off for fee of £1845. (based on 80% LTV)

    Now in my mind its worth paying what equates to just less than £50/month more to have the security and over 2yrs this will equal about £100, the same as the fee will be to re-mortgage.

    Is this a no brainer or am i missing something?

    I’ve never understood short mortgage fixes/discounts – you’re reapplying before you know it. Get the longest term deal you can

    dirtycrewdom
    Member

    Looks like I just bought a house. Better sort this mortgage out!!

    trail_rat
    Member

    Tbh im thinking of going for another 2 years fix at similar 2.5%ish as we took 2 year fix at high interest to leave funds to do renovation. Now we are in position to sort that how ever i dont think interest rates will be up in 2 years hence why the 5 year rates are so low atm – dont think the banks think its going north anytime soon , suspect these zero hour contract business is going to come to a head soon and give chaos again.

    Reckoning on a 5 year fix next renewal though as they will be heading north then i reckon.

    mrchrispy
    Member

    You need a spread sheet mate 🙂

    I ran all the numbers and a 5year fixed at 2.49% was the best and that was factoring in the 2k fee.
    I think thinks will be turning around in 2ish years and the rate might not be go good. 5 years is a long time and I’ll have paid a good chunk of the capital of by then so should be in a position to hunt out the best deals available at the time.

    5 years is the way to go

    spacemonkey
    Member

    5 yr fixed here. No brainer.

    johndoh
    Member

    simons_nicolai-uk – Member
    I’ve never understood short mortgage fixes/discounts – you’re reapplying before you know it. Get the longest term deal you can
    POSTED 9 HOURS AGO # REPORT-POST

    Although you can get better rates if you can be bothered with re-applying. Some mortgage companies will allow new applications from existing clients without new credit checks. FWIW I took out a 2 yr fixed at 1.94% earlier this year but will be looking again within 6 months of the deal ending.

    At the end of the day, whatever you choose is a gamble.

    bland
    Member

    think i got a decent deal, went for a higher rate after doing the sums but it was a £345 admin fee with £250 cashback and free valuation at 3.54% fixed for 5 yrs. Could have had 3.24% but came out more over the period.

    I can see things changing pretty quickly to be honest.

    Oh and got a broker to do me it free too, someone from a recommendation too as my friend who was going to do it free just happens to be on holiday after over two yrs trying to sell the place and it needs doing ASAP, typical but he was happy, give me this product and you get a £450 fee!

    hjghg5
    Member

    I always used to do 2 years but I completed a remortgage on tuesday and went for 5 years. I’m on a tracker for 2 years then it fixes for 3 (rate for the fix is already set but a bit higher than where the tracker part is now).

    ianpv
    Member

    I just fixed for 5 at 2.49%. Saves all the hassle of reapplying etc. every 24 months, and it isn’t going to get any cheaper…

    Premier Icon jamesgarbett
    Subscriber

    I just fixed for 5 at 2.49%. Saves all the hassle of reapplying etc. every 24 months, and it isn’t going to get any cheaper…

    Who’s that with?

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