Fixed 5 year or 2 Help

lindens

Svenena wrote: »

I've just applied for a 5-year fix at 3.19%. It's only £27pm more than the two year fix (relatively small mortgage as I'm purchasing a shared ownership property). I'm already at 60% LTV, so I don't think rates are likely to get more competitive when I've paid some off in a couple of years.

If I had a lower deposit and thought I could get into a lower LTV bracket when remortgaging, then I would have considered a shorter fix, or if I thought I was likely to move within five years. But otherwise I'd rather pay a little more for longer-term security.

the thing you need to think about is do you wish to staircase within the next 5 years?

smnberryman

lindens wrote: »

the thing you need to think about is do you wish to staircase within the next 5 years?

What does 'staircase' mean? Thanks

lindens

smnberryman wrote: »

What does 'staircase' mean? Thanks

when you buy a shared ownership property you are buying a percentage of the property eg 40% and a housing assoc owns the rest. you may decide a few years down the line you wish to own 60% or 100% and buy this extra. This is called staircasing.

Svenena

lindens wrote: »

the thing you need to think about is do you wish to staircase within the next 5 years?

Yes, that would have been a consideration, however it's only possible to staircase to 80% on this property, so it's not worth doing at all. This house will be for the medium-term rather than the long-term.

lazer

I am having the same debate with myself - i can get a 80% at the minute for 3.09% fixed for 2 years, or a longer fix at a higher rate up to 3.99% for 5 years

After 2 years I would have paid enough to get me down to the 75% bracket

enginesuck

I fixed for 5 years at 3.6 % this month with a 75% LTV, I hope to be < 50% LTV by the end of 5 years with a combination of overpayment, improvements and market increase, maybe even as much as 40%. If you are planning to stay in the property for > 5 years I think it's a sensible plan.

RavingMad

I've taken a tracker mortgage and gambling that rates don't go up this year. I want to get into the next LTV bracket before I fix for 5 years

ACG

Without knowing more its impossible to day.

I signed up to a 2 year deal last week, I was looking at a 3 year but because I only have 1 years accounts I was stuck with the lender im with. My house is also worth a lot more now than I paid for it 2 years ago but because of the lack of accounts I cant move lenders.

So I know in 2 years time I can go on to a 60% LTV product rather thn the 85% product im currently on.

Also im debating moving in the next 2-3 years so to tie in to a 5 year deal might have meant I was stuck where I am.

So there can be more reasons than just rate/fees on how long to tie in for.

Senior_Paper_Monitor

Spot on post ACG - clearly explains the thought processes and considerations that advisers should (and the better ones usually are) be trying to get the clients to go through in product selection.

Mact00

I was in the same kind of dilemma sometime back. In the end I choose the 4 yr payment instead of the 2yr one for the repayment of the mortgage I took from Northwood Mortgage in Ontario.
I believe that this decision was the best because the amount I have to pay now is something I can afford without much trouble. If I had chosen the other one I would have had to cut down on things and live under the constant stress about whether I will be able to pay this month's mortgage. So I vote for the longer term, gives you time and no unnecessary tension.