your thoughts on best rate to go for please

decsdad

Hi All,
So, offer accepted on our new forever home, just need to decide which rate to take.
Purchase price £205k
Deposit £65k

Borrow £140k
25 years.
2 year fix at 3.09% £670.47 p/m
5 year fix at 4.39% £769.45 p/m

so £100 more for the 5 year fix......what to do.....?

[Deleted User]

Personally - variable for a year (assuming it is lower than 3.09%), overpay like mad then a 5 year fix in about a year.

But there's no right answers. No one knows what rates will do or how risk averse you are. If you're nervy, then take the 5 year fix. I think 2 years fixes are a bad idea, as I believe rates won't go too far up for 1-2 years. In which case youll come off your fixed rate just when rates are getting higher, without having had any benefit from being fixed (as you'll have been paying a premium), and you'll find new fixed rates are very much higher. I'm pretty sure a 4.39% fixed rate will look quite attractive in 3-4 years, but you won't be able to buy them then.

But I'm just a bloke on the internet - you've got to make your own call. Well done on finding the house though!

opinions4u

You don't say what the SVR of this lender is at present. Would be useful info if you want people to provide an educated guess!

Thrugelmir

What are the product fees payable ?

Also opting for a 2 year fix will result in another fee payable at the start of year 3.

jonusb2

Personally - variable for a year

decsdad

no fees payable with either, regarding the svr, will get back to you

hillcats

As others state, difficult and personal decision based on the risks you are prepared to take.
Personally, I like Tracker Mortgages, but if you want / need the security of a fixed rate then do
what is best for you. I doubt we will see much interest rate movement for a while, but when it
does start moving I think we may have to buckle our seat belts for a bumpy ride...

dimbo61

You cant normally get a SVR mortgage ! So you have the choice of taking a 5 year fix at what is a very low rate compared to "normal" mortgage rates and overpay over the next 5 years to reduce the debt and increase the equity.
Now both the rates give me the impression that you have a good deposit ?
Think long term the mortgage is for 25 years

kkgree1

We have near on same finances as you.
Purchase price 209k and deposit of 73k with a mortgage of 136k.

We've gone with Britannia on their Lifetime tracker. Currently it's 1.99 above base rate with no overpayment fees, no redemption fee and no product fee. You do have to switch your current account to be eligible.

We were originally looking at 5 year fixed rates but looking around at the trackers if you can get one without any redemption fees it may be worth looking at as you can remortgage and fix when rates start to rise.