3 year or 5 year fixed rate?! Any advice?

Zippy79

I know it's impossible to make a call on interest rates long term.....but anyone have an idea of whether a 3 year fixed rate mortgage at 4.09% or a 5 year fixed rate at 4.59% is a winner??

They both sound attractive deals....if rates go up and stay up for a long time, then obviously the 5 year deal is great to be tied into, but I'd be kicking myself if rates didn't go up for years and I'm stuck paying over the odds (as i currently am!).

Is a Mystic Meg out there per chance?

SunnySusie

Well some people will tell you that the result of the money the government is pumping into the system will be inflation which will then be controlled by high interest rates. This makes sense but these things have a habit of not following the text book rules!

My own view is that rates are at a historic low so locking in for a long period is never going to be a "bad" decision. It might not be optimal, but it won't be a disaster. However not locking in could put you in a very bad place if rates do go up, could you pay back your mortgage if you came off your 3 year fix to rates of 8%? 12%? etc.

It's up to you of course, spend the time to work out the difference in cost, look at the worst case scenarios, decide what your risk profile is, then make a decision. Get in touch with an IFA if you need help thinking it through - you should never take serious financial advice from a forum!

Zippy79

Many thanks Susie, i am leaning towards the 5 year deal....i think!

dimbo61

I have a 5 year fix at a slightly higher rate than you are being offered with a ltv of less than 50% but I am happy with the security it brings!
If you can overpay as much as you can afford and see where you are in 5 years. GOOD LUCK