What to do? 2 Year or 5 year, Please help

johnbarnes

Hello everyone hope you are all well?

I am after some advice on what mortgage to take and if the rates look any good? Its between a 2 year fixed at 5.19 with a £1999 setup fee or a 5 year fixed at 5.79 with a £999 setup fee. (We will add the fee to the mortgage)

We are both self employed so there are not many companys that want to lend us the money. The house we are buying is £220000 and we are putting 10% down so will have a £198000 mortgage:eek:

Any advice would be great.

Many thanks

herbiesjp

How many years accounst do you each have?

johnbarnes

We have less then 6 months each, I have 3months and the other half has 2months so thats why not many people wanted to lend us the money.

[Deleted User]

5 years as interest rates will be fairly high in 2 years time at a guess id say 7-8% to sort out inflation.

Are you 100% sure you can afford it, ie over the last year or twos money turnovers have ALWAYS left you with £1400 SPARE, EVERY month.

jay7_2

Waw, so many similarities between you and us! It's a mortgage from Halifax, isn't it?

I'd go with the 5-year fixed mortgage, since I too expect the IR to go up.

golfnutt

I would opt for the 5 year fixed. £1000 less setup, 3 years extra peace of mind, nobody expects rates to drop in the next 5 years & they will sureley go up up again before the end of this one. Also you you dont want to be paying out again for another setup fee in two years.
But that's just my opinion !
Good luck...

johnbarnes

Many thanks for all your reply’s:beer:



The mortgage is with northern rock.

I think we are going to go with the 5 year one as we are happy with the monthly payments and we will know exactly where we are for the next 5 years.



Thank you for your help you are all great people:T

[Deleted User]

If you consolodate the setup fees into the interest rate for comparison -

2 year deal is actually 5.7%
5 year deal is actually 5.89%

So its not actually as more more expensive as psycologically those figures make out.