2 or five year fixed rate - which do I go for??

iwanttomove_2

Hi there everyone.
Used this site a lot but never posted a question on the forum before.
Here's my problem.....just about to move house, sold ours and had an offer accepted on our dream house. Getting a 90% mortgage with C&G but at 6.89% fixed for 5 years. Alternatively, I could get a 2 year deal for 6.99%. 5 years sounds like a long time at this rate, but who knows what rates will be in 2 years time let alone 5.

2 years sounds better as we may be able to get a better rate in 2 years time.

Does anyone have any inspiring advice?

Any advice gratefully received.

Thanks in advance.

ess0two

With 90% go for the 5yrs,if you were around the 75% mark i'd say 2yrs.

iwanttomove_2

thanks for your thoughts. I am erring towards the 5 year - just for security!

Peelerfart

Does it have to be fixed rate or could you be happy with any other options?

getmore4less

Moving house, did you have a porting option of some mortgage on a decent rate?

LTV can you make any overpayments in the 2 year time frame to bring this down to something sensible?


Personaly I thnk that fixed rated margins will narrow as rates rise but with this LTV unless you can tackle that it is a risk if lending does not open up, so the 5 year may be the better option even though it is very high in todays market but you are paying for that dream(so staying more than 5 years?).

If you want to play the rate over 2 years whats the best tracker you can get? comapre that to your 2y fixed

iwanttomove_2

Hi, it doesn't have to be fixed, but I like the security of knowing what I am going to pay. A capped rate would be OK, but haven't seen anything much better for the LTV we have.

iwanttomove_2

Hi getmore4less.

Thanks for your post.

In answer to your questions.

Moving house, did you have a porting option of some mortgage on a decent rate? Current lenders not interested in porting despite fantastic credit radting of 999 on experion and never missed a payment on anything ever. no other loans or cards.

LTV can you make any overpayments in the 2 year time frame to bring this down to something sensible?
Probably not in a position to overpay in 2 years.

Personaly I thnk that fixed rated margins will narrow as rates rise but with this LTV unless you can tackle that it is a risk if lending does not open up, so the 5 year may be the better option even though it is very high in todays market but you are paying for that dream(so staying more than 5 years?).
Planning on staying in house for many years.

If you want to play the rate over 2 years whats the best tracker you can get? comapre that to your 2y fixed
Not sure about trackers - who knows what will happen after the election, or the financial markets?

Hopejack

We too are just about to apply for a 2 year fixed rate. To be honest I would have liked to have gone for a 5 year fixed (have always had these in the past and like the idea of knowing what we are paying etc), but the place we are buying needs a lot of modernising and so we need money in the short term to do that, as a result we are going for a low fixed rate over 2 years - the lowest we can get! We are fortunate though in that we need a low ltv loan so we can look at slightly better rates.

I agree with the comment that you need to get your ltv ratio down if you can but then I know it's catch 22. Having said that, the way things are going - 100% mortgages could be back within the next few years - dread to think it though! But then a lot of people said 90 & 95% ltv mortgages were a 'thing of the past' yet they are creeping back in!

Good luck with your decision!