3.69% 4 years or 3.99% 5 years

JimmyTheWig

nick2011 wrote: »

fees are identical for both .

Fees are identical for both but for different length fixed terms. Many people remortgage onto a new deal when their fixed term expires. If you are to do that then paying a fee every four years is more expensive than paying a fee every five years.

But I expect rates to be rise in 5th year dramatically as from the most of predictions I read and its going to have huge impact. I mean significant rise. So why Not I stick with 5 years.

Have you looked for 10 year fixes, out of interest? Might be worth it if you think rates will be that high when these fixes are coming to an end?

In terms of the 4 year vs 5 year I would say forget about what you are paying each month and look at what it costs you - which is the interest rate.
For all I've been saying about reducing your balance, overpaying, etc, for the sake of back-of-an-envelope calculations we can assume the balance is staying the same in these first five years. With the 4 year fix you are saving 0.3% a year for four years. That means that in the fifth year you could pay an extra 1.2% on top of the 5 year rate to break even.

Basically I'm saying paying 3.69% for 4 years then 5.19% for 1 year would be the same as paying 3.99% for 5 years.
So the question becomes do you think you can beat 5.19% in 4 years time?

nick2011

Thanks Jimmy. Its logical argument and certainly interesting. I take all your points.
But I suspect after 4 years rates will shot up and that's why Nationwide has attractive 4 year deal + most market predictions as well. so it all(rate rise) suppose to come from early 2017 and with BOE rates change in past sudden rise( within over short period) is possible and which will be ( I guess) may go over 5.19%.
Even with 3.99% I am going to overpay and reduce O/S much as possible and forgone 4 year- 3.69%

So 2row I will submit my application and thanks for all your comments and it all certainly gave me a lot of thoughts . But at the end I would go for 5 yr fix.

JimmyTheWig

I'm not saying this because I think it would be the right thing as I don't know, but I do think you should consider longer-term fixes. I believe you can get 10 year fixed rates.

nick2011

Not in Nationwide Jimmy. They don't have 10 yr fix. Anyway 5 yr is good for me.