Re-mortgaging...2 years fixed OR 3 years fixed?!

krishijones

Ok, pretty bad with maths so asking for any help please.

In this current market, is it better to get a mortgage deal for 2 years or 3 years fixed? We are not good with money so don't want to take any risk with taking a tracker although it could be cheaper.

We are just worried that if we take a 2 years deal and at the end of 2 years, if the rates are really high, then we'd just be saying "oh man, we shud have gone with the 3 years deal!" I know no one can really predict the future but most of you will obviously have some idea....any insight into this would be helpful. Thanks.

Our details:
House Valuation: £165,000
Remaining mortgage: £105,000
Mortage ends: 31st September 2011

Morcerf

Why not go further and get a 5 yr fix? Yorkshire Building Society has a 3.99% 5 yr fix on offer at the moment - could be worth considering?

IFA_In_Surrey

I recommend most clients go for a long term fixed rate - assuming the product is portable, most are, there aren't any downsides (unless, of course, interest rates stay low for the next few years - most think this is unlikely).

Nationwide have a 5yr fixed rate at 3.89% (fee valuation and legal fees), Chelsea also have a 5yr product at 3.89% but only to 60% LTV and with a higher fee and there are now quite a few lenders with 5yr rates at 3.99%

jimjames

I've never had a fixed rate and it always seems to have worked out well. Friends that have fixed rates generally seem to be paying a premium for it - sometimes substantial.

Personally I think a tracker is a better bet at the moment as I really can't see rates rising quickly. Having said that 3 years ago no-one would have believed you if you said rates would be at 0.5% for over 2 years! That does mean that 3 years ago you'd have been locked into an expensive fixed rate and not benefitted from the massive drop in rates.

DannyboyMidlands

"We are just worried that if we take a 2 years deal and at the end of 2 years, if the rates are really high, then we'd just be saying "oh man, we shud have gone with the 3 years deal"

You've hit the nail on the head. Unless you can pay the whole thing off during the fixed term ALL mortgages are trackers. Whenever the fix ends you are at the mercy of current interest rates. Brokers love them because they get to churn every clients deal every few years. Personally I'd go for a cheap lifetime tracker with unlimited overpayments.