To fix, or not to fix?

flopstocks

I have spoken to London and Country and they have given me an idea of suitable mortages. Both have similar set up costs, we live in Cornwall so our relatively low income means the top deals from HSBC and ING are out of reach

A lifetime tracker with Barclays works out at £577 a month
A five year fix with Natwest comes in at £658 a month

A 1% increase in interest rates equate to £66 extra on the tracker. Which means I have roughly a 1.25% margin before I will be loosing out with the tracker.

I read that interest rates are not likely to rise within the next 2 years so I have not considered a 2 year fix. But who knows whats going to happen in 5 years?

ghaffa11

If you want a fixed rate Chelsea BS and Yorkshire BS offer some of the best rates but I dont think your broker has access to these so just be ware. Do some independent research

Thrugelmir

If affordability is an issue in that you would struggle should interest rates rise suddenly. Then take the longest fix you can.

Alternatively , and there is an element of risk, stay on your current lenders SVR and overpay as much as you can while interest rates are low. Whether this is worthwhile will depend on who your current mortgage is with.

jimjames

Really depends on the length of the fix and the interest differential.

If it is 2 year fix and 1.25% difference then I can't see the point as I think it is very unlikely that rates will rise by more than 1.25% in the next 2 years, in fact it is possible that rates will not rise at all in the next 2 years.

ruggedtoast

The fixed rate mortgage also buys you peace of mind dont forget. It may cost more each month but you dont have to worry about the rate going up.