2 or 5 year fixed

lee_w

evening

is it worth going for a 5 year fixed deal? i'm a ftb and just had a offer accepted, putting down 15% deposit and been offered 4.99% fixed for 5 years. but i will be paying £60 a month less on a 2 year deal.

any thoughts on what would be best?

dimbo61

If you take the 2 year fix rates will be higher in 2 years when you look at remortgages! and you will have paid very little off the debt ? so still 80/85% LTV.
now if you plan on staying at least 5 Years ? the 4.99% gives you long term security and the chance to get into 75% LTV when you remortgage and if you can afford to OVERPAY! maybe 60% LTV.
So are you buying a one bed flat or 3 bed house ? Are you married with Kids planned ? or single and happy that way :-)

sjlou

think about where you expect youll be in 2 and 5 years time...

we just had the same dilema when applying.
For us in 2 years time i hope to be pregnant/ on maternity leave so would not be a good time for us to remortgage or face a big increase in rates.
However in 5 years time i would hope to be back in full time work and we'd be in a better position to re-mortgage.

Radionotme

If you say in 2 years time you're on maternity leave, then 3 years later, remember that your child would still be in nursery (based on you saying you'd be back in full time work) so you'll have substantial extra costs to consider.
Just a thought, based on my own experience (my child starts at school this September)

andy.m_2

same dilemma, went the other way.

My belief is that yes rates are on the up, but at the moment there is still enough stability to keep it gradual for 24 months.
Then my fix will be for 60 months when I anticipate the rates to rise more aggressively.

Therefore I would rather come back to the market in 24 months and 84 months that in 60 and 120.

I also had a full 2% discount for the first 24 months so it made a fair difference to the savings pot.

sjlou

@ Radionotme - Good point. However would still be in a better position in FT work and paying childcare, than the very poor maternity pay i would be getting.


its so hard to guess what the rates will do (although cant go any lower!) so for us a fix is the best way to manage our payments in the next 5 years.

if you have flexibility and no dependants that a shorter fix or tracker could be better.

Only you know whats going to work best for you, and im sure different mortgage advisors would direct you in different ways.

good luck lee_w!

Gary123456790

Leeaquila wrote: »

If you would like to PM me, id be happy to discuss more formally.

FYI the mortgage advisor code of conduct on MSE forbids touting for work...

"Mortgage Advisers should not tout for business on the boards or in PMs. There should be no posts or unsolicited PMs offering mortgage adviser services. Nor should advisers ever say ‘see my profile for who I work for’ or make any other such comment.

However if a user requests their service either via PM or forum post then I have no objection to that and the business generated. Yet if someone requests the service by a post on the board, the broker should simply post to say “I will PM you” rather than posting details there. "

Doshwaster

I've just come to the end of a 2 year fix but I'm going for a 5 year one this time (should complete any day now). My thinking is that rates are bound to go up (they can't go down, and they cannot stop this low forever) and I'm happy locking myself in for 60 months.

Besides, the last 2 years have gone by in the blink of a eye. While re-mortgaging is a fairly painless process, it still takes a long time so kicking the next time I need to do it into the long grass suits me.

Thrugelmir

andy.m wrote: »

same dilemma, went the other way.

My belief is that yes rates are on the up, but at the moment there is still enough stability to keep it gradual for 24 months.

Aggresive stage appears to have started with rates edging up almost monthly now.

Phil_GT

Hi there if it helps

i was a FTB with nationwide 80k house > 20% deposit on a 2yr fix my rate was 5.5% 35yr £345

i have now this morning changeg to a 5yr fixed 4.59% at a cost of £307 a month over 33yr with plans to overpay £100 a month.

so i've saved about 40quid a month and got secuirty for 5 yrs

seen on the news that rates are starting to creep up in places. so thought as soon as i could switch (last 3 month with NW) i would

Darkstar

Well I just applied for a 7 year deal at 3.99%, I want long term security and hopefully I can pay £20K off my loan in years 6 & 7 which is what swung it for me. As has been stated rates can't go down much further but boy could they go up and I can still remember paying 12% plus back in the 90's.

A crystal ball that actually worked would be great but if you do the sums and work out how much you might save on a 2 year compared to a 5 year and then think of how much you could lose if in 2 years the gamble did not pay off and the best deal is now 7% plus, or even worse.