Fix for 2 or 5 years?

dimbo61

I am guessing but with both the 2 and 5 year deals allow 10% overpayments you would have long term security and the ability to make big overpayments for the fixed term

boiali

yes, they do allow 10% overpayments

stator

If you're not going to remortgage or move in the next 5 years fix for 5 years and enjoy the peace of mind

shireknight

I took out a 10 year fixed rate mortgage at 4.98% in 2007 literally just before the rates started dropping and I don't regret it one bit, it could so easily have gone the other way but for you it's different because the rates now can only go one way so if I was you I would fix my rate for as long as possible now while they are cheap.

JimmyTheWig

boiali wrote: »

Thanks for replies,
This is what I have been offered:

2 year fixed:
1. Nationwide: 1.84% +£499 in fees
2. HSBC: 1.49% + £1999 fees
3. Abbey: 2.09%

5 yr fixed: Woolwich 2.85% + £999 fees.

But I was told the first two are expensive if you include fees. So I was advised either Abbey or Woolwich, which is why I thought there isn't much difference.

Is my broker any good?

Who told you this? If it was a broker, I suggest a different broker!

Lets look at the cost of each deal over the length of the deal.
I'll assume an initial loan of £170k (buying at £360k, deposit of £190k) and for the sake of these back of an envelope calculations I'll assume this goes down by £17k each year (you want to pay it off in 10 years).

1. Nationwide: 1.84% +£499 in fees
Interest = 2972+2659
Fees = 499
Total = 6130

2. HSBC: 1.49% + £1999 fees
Interest = 2406+2153
Fees = 1999
Total = 6558

3. Abbey: 2.09%
Interest = 3375+3020
Fees = 0
Total = 6395

So of the three 2 year fixes on offer, the first looks the cheapest for you.


To me, that first deal looks much better value than the 5 year fix and if you can afford a potential rise in interest rates in 2 years time (which it sounds like you can) then I see no reason not to go for the best value deal.

boiali

Thanks again,
Indeed it was a broker who told me this. Even the 5 year deal I thought isn't the best but I am not sure...


For example, the Santander 5 yr fixed is 2.99%, £495 fees and £250 cashback. Plus I will earn 1% cashback with a 123 current account.