2 or 5 years fix with 90% LTV

mattrobbo99

Can fix at 2 years at 4.79% and 5 years at 4.89% with the currect SVR at 3.79%

I think that fixing for 5 years would probably be better as
i) the rates are almost certainly not going to go down
ii) If they rise, it will probably be in increments of 0.5% so just one rise is going to take you significantly closer to the fixed rate and a lot can appen in 5 years and all of it probably heading towards slightly higher interest rates

Agree or disagree? We can afford to take a bit of a risk but not if the SVR is over 6.5%.also changing the mortgagge after 2 years might be more difficult as at 90% LTV it might take a while to get the LTV down if house prices fall a bit

Yorkie1

If you are sure that you will not be planning to move within the 5 years, I'd personally go for the 5 year fix. Even if rates don't change significantly, you'll be paying another lot of valuation / mortgage application fees in 2 years' time if you want the security of another fix at that time.

joedenise

If I were in your shoes I'd also go for the 5 year fix. There is very little difference in the rates between 2 and 5 years and as you say if rates go up the SVR could end up higher than either of the fixed rates.

Denise

mattrobbo99

thanks. Yeah, I'm thinking 5 year fixed too. Better to be safe than sorry

Peelerfart

joedenise wrote: »

if rates go up the SVR could end up higher than either of the fixed rates.

Denise

some SVR's are going up despite BofE rates staying the same.

FWIW I'd go for 5 years too

irishcol

mattrobbo99 wrote: »

thanks. Yeah, I'm thinking 5 year fixed too. Better to be safe than sorry

just to play devil's advocate:

Plenty of people thought that they were being safe 5 years ago by fixing at >5%. Most people didn't see the crash coming, so were happy to fix at or aroudn the base rate at the time. In hindsight, they would have been much better on trackers or a shorter fix, but thye chose the "security" of a fix.

For what it's worth, my view is that rates aren't going to go up quickly, so if the best fix you can currently find is more than 1% above the current rate you're on (whether that be SVR or a tracker), then there's no real need to fix. When the first rise comes (either later this year or early 2013), reasonable fixed rates will be available (you'll still be able to find 5% fixed with a base rate of 1%) - so why pay more for the next 9 - 12 months?!

IIn my opinion, much better to stay on a lower rate and overpay - that way, you'll be reducing your term, as well as getting used to paying more for when rates go back up again.

Sammie_UK1

I'd be more inclined to go for a 5yr fix too.

Worst case scenario, if the bubble burts and property values hit the floor, you might be in negative/low equity at the end of your 2yr fixed rate deal. You might only have the option of going on a 90% or 95% LTV deal which will have higher interest rates than say an 85% LTV deal. With the remaining 3yrs of the 5yr deal, you have ample time to overpay and bring up your level of equity thereby getting a better remortgage with a lower LTV at the end of the 5yr deal.

Another upside is not having to pay for fees and valuations after 2years.

Plan for the worst, hope for the best

tc9604

I'd take the cheaper rate and put the extra you would have paid on a fix into overpayments. Then after a couple of years you'll not only have more equity than you would have done, but you'll be in a position to qualify for better rates on a 85% or 80% LTV deal.

Also, then you're not tied into a deal for 5 years because you really don't know what might happen. As someone said above (in a different context!), better safe than sorry so leave your options open.