2 year or 5 year fixed?

amazelucy

I'm sure there is no easy answer to this one.... but any advice would be appreciated


I'm coming to the end of a 5 year fixed rate.... and looking to fix again..... but should I go for 2 years or 5 years?


I like the knowledge of knowing what the amount will be for 5 whole years (will see my child safely into school and will be over £750 a month better off not paying so much childcare!), but the 2 year rates work out a fair bit cheaper each month, so I'm confused!


I know that know one will know for certain... but is there an indication of what the market etc may be like in 2 years time?


What are other pros/cons for 2 year and 5 years?

Thank you x

amnblog

This question ( or similar ) comes up every week.

With knowing your situation in detail no-one can sensibly advise you on this.

amazelucy

Thanks (and sorry!)


I know there won't be a straight answer, and we will be seeing an advisor, but I just meant general pros/cons for both so I can have a think and then have a meaningful conversation (with more of an understanding) with the advisor.

ChopperST

Are you back again Lucy?

I really think with all your questions you SHOULD be sitting down with a broker face to face to explain in detail your options and ensure you are making the right choices.

A two year fix will have the following pro's
- The rate will be lower
- You will then be able to overpay on the remaining capital
BUT
The following con
Rates my rise significantly over that period so you end your fix and your rate jumps to say 4, 5, 6 or even 7%

A five year will have the following pro's
- The rate is fixed for longer giving you certainity in what you are paying in the medium term
BUT
The following cons
- The rate MAY NOT rise and you will have paid more over the same period when you could have enjoyed a lower rate
- You will not be able to make as much by way of overpayments because of above.

You take's your picks you take's your chances.

Please see a broker to make sure you understand what you are signing up to and what is best in your circumstance.

amazelucy

ChopperST wrote: »

Are you back again Lucy?

I really think with all your questions you SHOULD be sitting down with a broker face to face to explain in detail your options and ensure you are making the right choices.

A two year fix will have the following pro's
- The rate will be lower
- You will then be able to overpay on the remaining capital
BUT
The following con
Rates my rise significantly over that period so you end your fix and your rate jumps to say 4, 5, 6 or even 7%

A five year will have the following pro's
- The rate is fixed for longer giving you certainity in what you are paying in the medium term
BUT
The following cons
- The rate MAY NOT rise and you will have paid more over the same period when you could have enjoyed a lower rate
- You will not be able to make as much by way of overpayments because of above.

You take's your picks you take's your chances.

Please see a broker to make sure you understand what you are signing up to and what is best in your circumstance.

Thank you! Yes I'm back lol. House is being valued tomorrow and then have a mortgage advisor booked for next week, and as I said on my previous post, this advice is great as it will just help me to have an understanding of the basics before having an in-depth conversation with the advisor.