2 or 5yr Fixed - What Would You Do?

johnydeath

I'm in this postion, my personal choice to suit my personal circumstance is the 5yr fixed.

I'm guessing that the rates will rise another 0.25 and then stay for a while. I guess they might drop below the fixed rate towards the end of my deal.

If we all knew, we would all be better off, but taking personal circumstance out of the equation, and based purely on what you think the base rate will do, hypothetically would you go for the 2 year or 5 year? (assuming the same rate for both).

Thanks.

superdon

We decided to go for a 3 year, cos we couldnt decide on the 2 or 5 year

johnydeath

superdon wrote: »

We decided to go for a 3 year, cos we couldnt decide on the 2 or 5 year

Good answer - but the 3yr is 0.2% above the other two to catch those unable to make the decision

KTF

Personally when my fixed comes to an end in September I will probably go for a tracker on the basis that rates will peak towards the end of this year then edge downwards from then on. Trackers seem to be lower than fixed at the moment as well so even if the rate does rise then its still cheaper.

fabwitch_2

Well I have just taken a 10 year fixed rate deal as I would rather know what my payments are and that wecan manage on this rate than chance the rate going sky high like it did in the 80's

mortgagelurker

if you plan to sell in the short term, then get a 2-3yr fixed-rate. If your not planning to sell, then i'd advice the maximum length term for fixed-rate.

Hope that helps

golfnutt

I would go for the 5 year fixed (just have ), rates are expected to reach 6% by the end of the year and who knows how long they will stay there.
Also you will find yourself in no time at all having to start to look for another mortgage product, with all the arrangement fees to pay again . 2 years will fly by.

johnydeath

With any fixed term rate you have to take into account the entire calculation to find which is best anyway

(term x monthly payment) + leaving fee + arrangement fee + valuation fee + legal fee + money transfer fee + other expenses

In my case I can get a slightly better rate elsewhere, but if I stay with my current lender then all I pay is a new arrangement fee which negates the better rate.

Hence just asking opinions on term with no external influences or flexibilities.

It's good to see the variety, keep 'em coming.

taka

My 1st Mortgage was in the mid 90s and I avoided some scary rates by fixing but got caught out towards the end of the period by the lowering rates. It seems to be a bit of a gamble! Since then fixing was an good choice for me as the rates have been low until recently.

I've just gone for the fixed rate again for the next 5 years as I plan to save as much as I can (ISA) or overpay the mortgage (if the mortgage rate is higher than saving rates once ISA full) in that time to put towards the mortgage when the fixed rate ends. If it all works out I'll only have a smallish mortgage left which may not be worth applying for another fixed rate etc then!

Unfortunately there seems to be no crystal ball to guess what'll happen to the rates in the next few years so I'm fixing mine!

FaTB

KTF wrote: »

Personally when my fixed comes to an end in September I will probably go for a tracker on the basis that rates will peak towards the end of this year then edge downwards from then on. Trackers seem to be lower than fixed at the moment as well so even if the rate does rise then its still cheaper.

That's a very brave assumption.

With the inflation genie well and truly out of the bottle now, my feeling is that over the next couple of years, IR's will gradually climb back to the long term average of around 7.5 ish %, and stay there for some time.

Personally I would be going for the 5yr term, it's possible you might lose out a bit if rates do come down, but it does give you the security of knowing that you can pay the mortgage each month.

Your family home is not worth gambling with for the slim possibility of saving a few quid further down the line.

homer_j_3

why take your personal circumstances out of the equation - surely this is what should be helping you decide.

Taking interest rates out of the equation. The main difference between 2 & 5 yr fixed are normally the length of time you are tied in with the lender and its how soon you have to start looking for a new product again.

No one can tell what rates will be in 2 months never mind 2 years. It therefore stands to reason that your personal circumstances should be a strong consideration and if you are concerned about being left paying over the odds then maybe a capped rate is the way forward