Fix for 5 years or 3?

G1LES

First time buyer looking to borrow £85k for a property worth £135k. I am young and as such don’t have an abundance of money, so rather going for a tracker and gambling money I cannot afford to lose I am inclined to get a fixed deal, ensuring I know exactly where I am.

Halifax are offering fixed for 3 years at 4.15% or 5 years at 4.62%. Both have fees of £999 but pay half my council tax for a year (for me this will work out at £492 back over the year).

The difference between the rates is working out an extra £23 a month for the 5 year deal. I can comfortably afford to pay the higher rate but always looking to pay as little as possible in the short term to increase my disposable income.

The 64 million dollar question is… if I were to fix for 3 years when I come to remortgage 3 years down the line am I likely to obtain a deal anywhere near todays 4.62% 5 year deal??

I suppose it’s a bit of a no brainer, although no one knows what the rates are going to be like in 3 years time, its got to be a given they’ll be higher than 4.62%. With this in mind would I be mad to fix for 3 if I can afford to pay the 5 year rate for the sake of saving £23 a month???

Thoughts would be most welcome, equally any other mortgage deals or advice for my situation would be appreciated.

thriftymomma

No-one can predict what the interest rates will be in 3 or 5 years to be honest. I would say fix for 5, then you at least know you are comfortable for that amount of time. Good luck with whatever you decide.

dimbo61

Agree with TM as a 5 year fix at 4.62% is a good deal and you have security for the first few years of owning your first property.
You are putting down a very good deposit and you will be surprised at how little you pay off the mortgage in the first 2/3 years.
Take the 5 year deal and overpay if you can afford each month while keeping the mortgage payment static as this will clear the mortgage even quicker.
This is only my opinion not advice GOOD LUCK

G1LES

many thanks guys, appreciate the comments.