Fix for 2 or 5 years?

VKay

Having a real dilemma! Am a ftb and tempted to fix for 5 years. My IFA says she never recommends fixing for more than 2 years. Do you think this is still sound advice in the current climate? Do any other IFAs reading this give that same advice? Thank you.

hearts

What are the rates for the fixes? Very important detail to leave out ;-)

VKay

ha ! Thanks. Well there is a Natwest 2 yr fix for 3.49% (£799 fee)and RBS 5yr fix at 4.59 (arr fee only £299). i think I am eligible for both.

downs523

them rates are good, what deposit you got?

downs523

forgot to add, i would definatly go for the 5 year fixed rate as interest rates will start to rise and it saves paying fees every 2 yrs

VKay

Hi just over 25% deposit luckily (well not luck, hard saving for years)!

lauren1983

Hi VKay,

Im in the same situation. Went to Natwest on fri and got offered the same rates and fees.

Im pretty sure that we will be going with the 5 yr fixed rate. Then we wont have to worry about rates rising and like downs523 said we wont have any more fees for a while. The fee is realy good to isnt it! I couldnt believe it when she told me !!

Good luck with what ever you choose
Lauren

dwsjarcmcd

In this climate, I would fix for 5 years to give you the chance to ride out any house price reductions.

VKay

Hi lauren (and co)

Thanks for your input it's really good to hear of someone in the same boat- i have noone to talk to in real life who is in the same situation. I don't really understand what would happen if we fixed for 5 years and then for some reason had to move house (new jobs/ decide we don't like area etc??)? Would we definitely end up paying a huge 'get out' fee or could we transfer to next house? It's hard not being able to predict the future!!

Good luck Lauren!

herbiesjp

VKay wrote: »

My IFA says she never recommends fixing for more than 2 years. .

I'm sure she doesn't!

This makes me cringe to be honest

The mortgage should not be about what the IFA/MA wants to recommend to you i.e. never recommends fixing more than two years.

It should be about the IFA/MA has to recommend to you, based on what you have asked for and based on your circumstances, the most suitable product.

I would find it hard to believe that a 2 year fix is the most suitable product for all her clients!

It would be nice having all your clients coming back every year, looking for a new mortgage! But is that best advice?

I don't know any of your details, but my own feeling is that while we are at 1.5% for BoE there is not that much more scope for it to go down - what I mean is that we are far closer to zero than we are to say 10%

So even if rates do go to zero - how long will they stay there, and then how quickly will they start going back up?

Against this backdrop, you have house prices going down. So while at present 75% LTV gets you a good deal, if in 2 years time you are at 80% or above (because your house value has dropped) you are no longer going to be in the bracket of competitive deals.

So double whammy: 1) rates may well be higher in two years time, and 2) you may fall into the highest tier of rates due to house prices going against you

A 5 year fix may well be what you need to look at.

But as I say - that could only be ascertained after a long discussion of what you are looking for

You might want to get a second opinion from a different whole of market adviser

Radiantsoul

VKay wrote: »

ha ! Thanks. Well there is a Natwest 2 yr fix for 3.49% (£799 fee)and RBS 5yr fix at 4.59 (arr fee only £299). i think I am eligible for both.

The differences in fees is quite large £350 per year versus £60(equivalent to about 0.3% extra interest rates on £100k. Depending on the amount you are remortgaging it might be an important factor.