2 year fixed or 5 year fixed

stu_neilson

hi i,am in a pickle
should i go for a 2year fixed deal or sould i go 5 year fixed
2year fixed @ 2.69 £99 set up
5 year fixed @3.89 £99set up

I owe £95k over 20 years and it is for a remortgage

slipthru

Personally i would go with a 5 year fix so you know what you will be paying for the next 5 years. That's what we did when we took out our mortgage.

Yorkie1

Very true, O4U, but assuming rates not too different, my starting point in principle would probably be the 5 year fix as rates are anticipated to start rising so the 2 year fix may end as that has happened, and also you'd in all likelihood have another product fee to pay after only 2 years rather than 5.

Peelerfart

2 year fix, 5 year fix, SVR, tracker or offset ?

Without a bit more info it's impossible to give an opinion.

originalmiscellany

Are you allowed to overpay at all? What % per year?
Is the mortgage portable, e.g. can you transfer it if you want to move house in year 3 of 5?
Do you need to change your bank to be with the mortgage provider?

For what it's worth I'd say 5 year fixed is the way forward.

Gorgeous_George

I've used £100K over 20 years and added the arrangement fee to the loan.

The 5 year fix would cost £600.79 per month and you would owe £81,750 at the end of 5 years.

The 2 year fix would cost £539.74 per month and you would owe £92,332 at the end of 2 years.

Analysis.
The 5 year option costs £61.05 per month more but is guaranteed to remain the same for 5 years. Whilst the 2 year option is cheaper you don't know what rates will be in 2 years time when you will want to remortgage. Would the 2 year deal revert to a tracker or a dodgy SVR after the fixed term?

Assuming both revert to 4.79% at the end of their fixed terms, both deals would cost the same over 20 years. If rates are higher than 4.79% then the 5 year fix is cheaper over 20 years. Lower (than 4.79%) and its the 2 year fix that comes out best.

Is this a new mortgage or a remortgage? Is there another option to consider?

GG