Mortgage 2 year or 4 year fixed

lainey10

I have my current mortgage with halifax on variable rate 3.99%. I can get a 2 year fixed deal for 3.24% and a 4 year fixed deal at 3.99%.

My question is I would like to move house in 2 years time and wonder whether to take the 2 year or 4 year deal. Halifax have said I may be able to take rate with me as long as property am buying is same size etc.

Not sure what would be best? ???

garethbrock

If you are looking to move then take the two year fix.

I had to make the same decision between the two rates and lengths. For me two years was better as if I overpay the mortgage then in two years time I will get the 60% ltv rate. Also as I can only over pay by 10% each year at the end of the fix I can dump all the saved cash that I can't use to overpay off onto the mortgage and then fix again the following month.

So in two years time are you:
Planning to move?
Overpay more than 10% but done want the charges?
Drop into a lower ltv?

I'm no expert, just my thoughts and the months I've spent on here reading. Oh, and do the transfer online, anything else is advised and will need to follow the mmr rules.

paula123gym

I am in a similar situation
I need to choose between 2 year fixed at 2.29% or 4 year fixed at 3.24%

We don't plan to move in the next 4 years. We are both self employed and have two children.

Our mortgage is our only debt. I guess the 4 year means we know where we stand for the longest period but the 2 year is cheaper (obviously) and might be better if rates don't go up quickly before we need to renew it?

Any advice appreciated. Thx

GoneWithTheWindFabulous

Hello

I am also in same situation. I posted a thread in wrong board - its here

https://forums.moneysavingexpert.com/discussion/5079830

For me its about my LTV and it won't get lower than it is already for me to benefit.

I think I have decided on 4 years at 3.44% - Its less than I pay at the moment (currently on 3.99%) gives me more time and freedom to overpay which I will do, so once I am out of fix at 4 years hopefully I will be in a better position to deal with whatever interest rates there are at the time.

Any rate rise in the next 2 years will have an impact on other fixed rates even by a small % - Would I regret not being fixed in 2 years and couldn't get a similar rate?? (probably)

At the moment I am tied into my existing lender, only because it will be more hassle for me to move. I had seen at 5 year at 2.99 although had a £995 fee as well so not great to add on an extra £1k

The difficulty is knowing about what rates will do. If they stay the same - I still get a small benefit as would be paying slightly less than I am now anyway

Thats my thought.. for this hour anyway ha ha I have changed my mind many times, although have signed my 3.44% form and its looking at me...lol

paula123gym

Thanks good to know i'm not the only one in this situation. I doubt we will be overpaying any time soon though. Also tied into our existing lender as both being Self-Employed it would probably be tricky to switch (and a lot of hassle) Tempted by the 4 year for similar reasons - the monthly payment on the 2 year is considerably less than what we pay now so tricky to ignore!

GoneWithTheWindFabulous

paula123gym wrote: »

Thanks good to know i'm not the only one in this situation. I doubt we will be overpaying any time soon though. Also tied into our existing lender as both being Self-Employed it would probably be tricky to switch (and a lot of hassle) Tempted by the 4 year for similar reasons - the monthly payment on the 2 year is considerably less than what we pay now so tricky to ignore!

What you need to think about is how you would feel if the rate went up by 0.5 per year (just plucked that out of the air) over the 2 years or even by a total of 1% after the 2 years.

What rate are you on at the moment?

Some people say people only fix if they cannot afford extra payments, but I like to see another way, that I like to know whats coming out so I can relax and not think too much about it for a while anyway

GoneWithTheWindFabulous

paula123gym wrote: »

Thanks good to know i'm not the only one in this situation. I doubt we will be overpaying any time soon though. Also tied into our existing lender as both being Self-Employed it would probably be tricky to switch (and a lot of hassle) Tempted by the 4 year for similar reasons - the monthly payment on the 2 year is considerably less than what we pay now so tricky to ignore!

Also if you are moving and interest rates rise - if you are going to a larger property then you may also be happy with the higher rate (obviously that depends what rates do)

Also if moving you need to consider what your LTV would be and would you be eligible for a lower rate anyway? Is the current rate based on the fact you will have the same LTV if you move?

paula123gym

I think we will move at some point but not in 4 years. Our LTV is 58% and we are currently on a fixed rate of 4.79% which comes to an end this month. Thanks so much for your advice and observations.

paula123gym

If we moved our LTV would change as we would want a bigger house BTW. Tricky as also i suspect we will both still be Self employed which makes it tricky

getmore4less

Don't forget to look at the best tracker rates and factor in the fees.

no point scraping a tiny amount of the rate if the fees just mean you end up paying more.

GoneWithTheWindFabulous

No problem - I have posted mine now.. I don't think I am losing out either way on 3.44% no fee, if rates stay the same I save £26 a month (but I plan on overpaying) If rates rise I will still be in a better position for at least 4 years.

Good luck - Do let me know what you decide