Two Year fix 2.64% vs Four Year fix 2.99%

The_Palmist

Hi Guys,

Current deal at 2.69% Monthly payment £451 set to expire at end of this month.

Halifax have offered me two fixed rate deals, both with no fees and same early repayment structure.

1. 2 year fix at 2.64% £441 pm

2. 4 year fix at 2.99% £456 pm

If I leave it as it is it will go to their variable rate 3.99% £502 pm.

I am very much tempted towards the four year fix for the added security. Mrs. says go for 2 year and is banking that we may find a similar deal at the end of two years. I don't think the saving is worth the risk.

Any advise/opinions much appreciated.

kingstreet

Are you anywhere near a LTV band change? If you are, think about paying for a drive-by, or internal inspection so you avoid Halifax automated valuation model and see if you can get in the next LTV band down and get a better rate.

Fee-free remortgage options?

The_Palmist

kingstreet wrote: »

Are you anywhere near a LTV band change? If you are, think about paying for a drive-by, or internal inspection so you avoid Halifax automated valuation model and see if you can get in the next LTV band down and get a better rate.

Fee-free remortgage options?

Thanks KS, no way near a band change. Was just under 75% two years ago and a long way to 60%.

No fee free remortgage options mentioned but I can check. 2.64 and 2.99 fee free are still better than what they are giving new customers.

I have looked elsewhere as well but again the above rates seem much better.

kingstreet

Really?

I haven't associated Halifax with market-leading rates for a long time.

Normally plenty of other reasons to use them, though.

redpete

I reckon these fixed rate deals are based on two things: 1) How the lender expects rates to move over the period and 2) an extra bit to allow for the risk of their prediction being too low.

The risk of them getting it wrong over 4 years is more than over 2 years - so I would expect the second bit of the calculation to cost more for longer periods - which could mean that shorter terms are on average better value.

You also need to take into account any arrangement fees which probably differ between the offers.

I don't see any reason to stay on variale rate unless the arrangement fees for the fixed-rates make the overall cost over the period higher.

amnblog

The 4 year rate is competitive. The two year rate is a mile off the pace.

If you are going two year I would look at other lenders first.

redpete

amnblog wrote: »

The 4 year rate is competitive. The two year rate is a mile off the pace.

If you are going two year I would look at other lenders first.

Of course, always compare what's on offer from different lenders, again taking into account fees which might be different depending on whether wyou stay with the same lender or go elsewhere.

xyz123

if those two are the only options, 4 year is a no brainer for the piece of mind at extra £15 a month..

amnblog

are you suggesting the OP's wife has no brain?

xyz123

amnblog wrote: »

are you suggesting the OP's wife has no brain?

Only a mortgage adviser can conclude that from my comment?

The_Palmist

amnblog wrote: »

are you suggesting the OP's wife has no brain?

ssshhhhh she works for one of the bigger lenders out there, shame we can't enjoy the staff rates yet.