2 year at 2.49% or 4 year at 3.99%

GoneWithTheWindFabulous

Hello

Looking at product transfer and after opinions really

Currently owe £85000 (and a bit) on mortgage - value is approx £204000

I have the 2 above products on offer to me

I first thought that 4 years would be better (£490), but am now thinking maybe 2 years (£450) , and I could try and pay what I pay now (£520) plus a bit more

Thinking about this with rate rises in mind, I guess no one knows but would be good to have opinions - I could come off the 2 year fix just as rates rise, but also the same could be for 4 years

I am currently at <60% LTV so actually my LTV is unlikely to change to be lower during this time.

I have been used to paying at a rate of 5.79 before and have worked out that I could comfortably manage (at the moment) if rates were 7% I haven't worked out much more than that.

Please can I have opinions

AdrianC

What interest rates are going to be available to you in years 3 & 4? That's the key question. You're gambling against future rate rises, two years away. What combination allows you to pay least interest over the four years. Will it be 2.49% for the first two then whatever's available for 3 & 4? Or will the available rates at the end of year 2 be high enough that you'd have been better off going for 3.99% for four years?

If any of us knew the answer, we wouldn't be posting on here, we'd be sitting on our own Caribbean island...

Kynthia

One reason to fix for longer is because you can't afford an interest rate increase so you'd rather pay a little extra in order to know what your repayments will be for longer. This doesn't apply to you.
Another is because you feel that interest rates will rise by more than the higher rate within the longer fixed term, but that is always guess work.
Finally you may feel your circumstances are going to change and remortgaging would be more difficult, so you fix for longer. For example your income is going to decrease, your dependants are going to increase, you're becoming self employed, you are going to be increasing your debts for some reason (maybe loans for home improvement works or buying a car and furniture on credit). Would that apply to you?

[Deleted User]

Personally I'd take the two year fix assuming it was fee free then overpay.


Recently did this with HSBC, 2.49% fix two years fee free down from 2.99%. Overpay by the max 20%.

sydenhambased

How about shifting to a different lender and getting a five year fix at 3%? I don't know your circumstances for lenders' affordability criteria, but a cursory glance at the price comparison website (that owns this forum) would indicate that for that size of loan, LTV, and repayment period (20 years remaining, ish?) 3% ought to be possible.

And then keep overpaying it...

ging84

i don't see a 4 year fix as being worth paying extra for, certainly not an extra 1.5% when the rates are so low.
a 4 year fix could end up not only costing you more, but also narrowing your short term options.
In 2 years time the rate will likely be worse than now, but they will also as likely be worse in 4 years time and there is a reasonable chance that they will be even worse with an outlook which is worse.
The safest option might be to fix for the minimum amount of time right now so you have the option to fix when you actually need to

GoneWithTheWindFabulous

jeepjunkie wrote: »

Personally I'd take the two year fix assuming it was fee free then overpay.


Recently did this with HSBC, 2.49% fix two years fee free down from 2.99%. Overpay by the max 20%.

Yes Fee Free - which is good
Can I ask re your LTV? You see mine is 60% so in terms of deals not going to benefit as much as others would

sydenhambased wrote: »

How about shifting to a different lender and getting a five year fix at 3%? I don't know your circumstances for lenders' affordability criteria, but a cursory glance at the price comparison website (that owns this forum) would indicate that for that size of loan, LTV, and repayment period (20 years remaining, ish?) 3% ought to be possible.

And then keep overpaying it...

I have an equity share in property, I checked and will cost me a little bit more up front and take time to sort it all out so have decided to stick with who I am with. I originally had a 2.99% 5 year rate.

ging84 wrote: »

i don't see a 4 year fix as being worth paying extra for, certainly not an extra 1.5% when the rates are so low.
a 4 year fix could end up not only costing you more, but also narrowing your short term options.
In 2 years time the rate will likely be worse than now, but they will also as likely be worse in 4 years time and there is a reasonable chance that they will be even worse with an outlook which is worse.
The safest option might be to fix for the minimum amount of time right now so you have the option to fix when you actually need to

Thanks arggh decisions decisions lol

GoneWithTheWindFabulous

AdrianC wrote: »

What interest rates are going to be available to you in years 3 & 4? That's the key question. You're gambling against future rate rises, two years away. What combination allows you to pay least interest over the four years. Will it be 2.49% for the first two then whatever's available for 3 & 4? Or will the available rates at the end of year 2 be high enough that you'd have been better off going for 3.99% for four years?

If any of us knew the answer, we wouldn't be posting on here, we'd be sitting on our own Caribbean island...

True. Good to discuss though

GoneWithTheWindFabulous

Also forgot to say my rate is 3.99% now, so actually with 3.44% will be paying slightly less

[Deleted User]

GoneWithTheWindFabulous wrote: »

Yes Fee Free - which is good
Can I ask re your LTV? You see mine is 60% so in terms of deals not going to benefit as much as others would

Apologies, our LTV is 36%


Cheers


PS Quick check on some comparison sites reveals cheaper headline fixed rate deals but all backed by £1000 > £2000 arrangement fees... Wouldn't touch any of them with a bargepole