2yr vs 5yr fix?

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boogiesherbs
boogiesherbs Posts: 197 Forumite
in Mortgages & endowments
Good morning all ,

I'm torn between a 2yr fix or a 5yr fix rate mortgage, fees are the same but a £71 per month price difference.
I'm tempted to roll the dice on rates being similar in 2yrs but is that foolish?

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  • muhandis
    muhandis Posts: 994 Forumite
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    The honest answer is that no one can say where interest rates might be 2 years down the line, let alone 5 years down the line.

    In your place I would avoid trying to predict interest rates and consider the following points -

    - Am I likely to have to move for any reason in the next 5 years
    - Do I prefer the certainty of fixed payments for the next five years or am I one of those people who will track interest rates ever so often and curse myself if they go down ;)

    PS: I personally would always go for a shorter fix, but that just reflects my personality and way of looking at it.
    boogiesherbs wrote: »
    Good morning all ,

    I'm torn between a 2yr fix or a 5yr fix rate mortgage, fees are the same but a £71 per month price difference.
    I'm tempted to roll the dice on rates being similar in 2yrs but is that foolish?
  • boogiesherbs
    boogiesherbs Posts: 197 Forumite
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    muhandis wrote: »
    The honest answer is that no one can say where interest rates might be 2 years down the line, let alone 5 years down the line.

    In your place I would avoid trying to predict interest rates and consider the following points -

    - Am I likely to have to move for any reason in the next 5 years
    - Do I prefer the certainty of fixed payments for the next five years or am I one of those people who will track interest rates ever so often and curse myself if they go down ;)

    PS: I personally would always go for a shorter fix, but that just reflects my personality and way of looking at it.


    Hi firstly thanks for you reply,
    The mortgage is to move house and plan to stay there for foreseeable future, the second question is that yes I'm permanently checking rates!
  • Glover1862
    Glover1862 Posts: 410 Forumite
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    I'm in the same situation, I'm favouring 2 years simply because it fits in with my overpayment plans, only 0.45% premium for a 5 year fix for me so quite close so not made up my mind yet. I have until 31 Jan but still reserved the 2 year in case we get some upward movement.
  • boogiesherbs
    boogiesherbs Posts: 197 Forumite
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    Yeah it's 0.60% between the two for myself
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    There arent many realistic* scenarios where rates rise enough over the next two years that you can't, worst case, get a 3 year fix in 2 years time and overall over 5 years end up paying no more. So i believe 2 years is a one way bet, heads you win, tails you dont lose.

    * rates would have to rise very high very fast, and even when it was contemplated they might rise, the BoE said it would be slowly in small increments. And that was pre Brexit, now high rates would be economic suicide for the UK.
  • boogiesherbs
    boogiesherbs Posts: 197 Forumite
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    Thanks for responses had my initial mortgage application and asked for both products they are going to do checks etc on the 5yr as it's a higher amount per month , but say I can still edit application to 2yr if I decide before paying fees
  • strawberries1
    strawberries1 Posts: 873 Forumite
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    boogiesherbs wrote: »
    Thanks for responses had my initial mortgage application and asked for both products they are going to do checks etc on the 5yr as it's a higher amount per month , but say I can still edit application to 2yr if I decide before paying fees

    What did you decide OP?
    We're in the same boat!
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    strawberries1 wrote: »
    What did you decide OP?
    We're in the same boat!

    Post 6 still applies.
  • strawberries1
    strawberries1 Posts: 873 Forumite
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    AnotherJoe wrote: »
    Post 6 still applies.

    I agree with you on rates and the economy AnotherJoe.

    What're your thoughts on difficulty in then getting another mortgage in 2yrs if there're changes in personal circumstances? eg if one becomes self emp or has a child ??
  • kingstreet
    kingstreet Posts: 38,767 Forumite
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    Please discontinue and post in strawberries own thread;-

    http://forums.moneysavingexpert.com/showthread.php?p=72280231#post72280231
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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