Fixed rates - 2 years or 3?

StripyRex

I'm a FTB looking to borrow £90k with an LTV of 80%. I'm torn between a 2-year fixed rate at 3.79% or a 3-year at 3.99%

According to the on-line calculators, the replayment for the 3-year is only £10 more per month and obviously gives a longer period of security. Do I go for the lowest rate, or is the extra year worth paying for, given that interest rates are as low as they are probably going to get?

As an FTB, I am drawn towards securing an affordable repayment for as long as possible but would that be the wisest move??

getmore4less

2-3 years is no time at all, look at the follow on rates.

if cash is tight you need to fix for long emough to be sure it won't be a problem.

pay rises, reduced costs, reduced interest rates.

opinions4u

Five years.

englandcrew

If you want security have you thought about five years? Britannia currently have 5 years for 4.09% but charge a fee or 4.29% without a fee

paulmapp8306

Is the 2 years fixed with Barclays/woolwich? If so its the one I went for. it was between that and a tracker - though I didnt know about the 5 years fixed at 4.09 as I might have gone for that.

The follow on for the Barclays is 3.99%, which is what swung it (though its unlikely to be that in 2 years - it gives an indication). the tracker while 2.99% above base, had a follow on after 2 years of 4.9%.

Coded

We're currently considering ING direct 3.69% for 2 years and then SVR (currently 3.5%)

Also check out Post Office 3.99% 5 years fixed, but they have a horrible SVR of BoE+3.99%

Bufger

It depends on personal circumstances. When i got a mortgage 2 years ago (FTB) I was new in my job and we planned on having kids so I went for the longest fixed rate I could which was 5 years at the time. I'm glad i did that as a wedding and 2 kids later I still dont have to worry about rates and can continue paying the standard payment.

After this fixed term I will be a few thousand better of per year in my job and the big costs will all be behind me. I would have also paid off my student loan and car loan which will leave me an extra £400 per month so at this point i'll be looking for a rate that allows me to overpay (depending on economy etc).

Dont look at what the market is doing, look at what you're doing.

Yorkie1

If you only go for 2-3 years, in a relatively short time period you will have to consider remortgaging again - with the attendant redemption / application / survey etc fees. These can be quite steep and so add a lot onto the overall cost of the mortgage if it's over a short time period.