Fix for 2 years or 4 years?

LaFlotte

Hi All,
I wondered if I could ask your opinions please. Our mortgage deal (currently 2 year fixed rate with Halifax) is coming to an end and apparently we qualify for two new deals which are:

2 year fixed at 2.64% which will make our mortgage payments £1068.61
OR
4 year fixed at 3.44 which will make our mortgage payments £1159.56

Current mortgage payment is £1250 but I think we have just come below the 75% ltv which is why we are now being offered a better deal.

House value is £311,500 and mortgage is £222,500.

I would like the stability of the 4 years but the cheaper monthly payment on the 2 year rate would really help us as we are trying to get rid of a couple of credit cards and the extra £90 per month could go straight to those.

I'm worried that after two years the rates will be much higher.
Or
Perhaps we're better going for two years and then fixing for as long as possible after those two years as 4 years from now the rates could be even worse!

Sorry to ramble and I hope I'm explaining myself ok! As you can see we are going round in circles.

£90 doesn't sound like a lot, but although we make ok money, we have old debt which we are really trying hard to pay off so want to make the right choice.

Thanks in advance.

amnblog

The right choice is probably an alternate lender as these rates are a shade off the pace.

drina

@amnblog: if you factor in all potential remortgage fees (product fees, potentially legal and valuation fees) I'm not sure there are much better deals out there. Especially also considering the 'revert to' interest rate, that's important too, right?

@LaFlotte: nobody can give you a direct answer on that one. I went with the 2-yr one you quoted, roughly same mortgage size and LTV. In two years from now chances are you'll be around 60% LTV (well assuming no crash ) which should give you access to the lowest interest rates available at that time.

betmunch

drina wrote: »

Especially also considering the 'revert to' interest rate, that's important too, right?

Dont put too much stock in the revert to rate, this thread is all about avoiding going onto that rate with no indication the OPs attitude would have changed when the next fixed rate expires.

skdav

I am also coming to the end of my initial 2 year fix with Halifax and their rates were not very inspiring. I thought another 2 year fix would probably have me coming out in the middle of rate rises and the 3.44% rate wasn't attractive enough for me to lock in for 4 years as I see myself possible moving before then.

In the end I decided to go with the 2.29% no fee lifetime tracker from HSBC (although I think LTV has to be below 70%). I'll continue with the same payment I make now so will be overpaying quite a bit and should hopefully get my LTV down below 60% within a year in case I do decide to fix at a later date

LaFlotte

Thanks everyone that has replied so far....

That's a good point about our LTV being less after two years and better rates being available. Maybe I should do some sums to make sure that it would be at a certain level and we could overpay a little bit too.

I still worry about rates going crazy in 2 years time though!

Good point about 3.44% not being a brilliant rate to lock into for 4 years though. I don't think we would qualify for the lifetime tracker with HSBC as our LTV is above 70%.

Wish we all had a crystal ball....

pixie__girlie

skdav wrote: »

I am also coming to the end of my initial 2 year fix with Halifax and their rates were not very inspiring. I thought another 2 year fix would probably have me coming out in the middle of rate rises and the 3.44% rate wasn't attractive enough for me to lock in for 4 years as I see myself possible moving before then.

In the end I decided to go with the 2.29% no fee lifetime tracker from HSBC (although I think LTV has to be below 70%). I'll continue with the same payment I make now so will be overpaying quite a bit and should hopefully get my LTV down below 60% within a year in case I do decide to fix at a later date

Hi skdav, we are in the exact same position as you, coming to the end of a fixed deal with Halifax..and looking at the HSBC lifetime tracker. Did you have to pay any solicitor/legal fees to remortgage with HSBC? Whole thing is giving me a headache!! x