2 or 5 year fixed rate?

pickles13

As a FTB, I am struggling to decide between a 2 or 5 year fixed rate mortgage. There is a difference of £107 in it. Can anyone give me some things to think about when making my decision, please?

getmore4less

why only fixes?

Loopy28

I would go for the 2 yr rate. Over those 2 years you will pay £2568 less. Yes there is the risk that rates will increase but you will have saved that amount of money over the next 2 years and will rates increased to above what the 5 year fix would be in 2 years? Or if it is more, will it cost you more than £2568 in payments over those 2 years? Noone knows but personally I would opt for the 2 year.

sitesafe

I went for a 5 year fix (after having had a two, then three year tracker). I regret it now as so many things have happened where having the fix has been a big pain. I can't wait to get rid but I have to wait for 2 years or else I have to pay a £3k early repayment charge. Still if interest rates had gone up I might not be complaining. But never again for me anyway.

boatman

Go for a tracker and over pay the difference you would have payed had you fixed, will bring down your capital faster. Use the mortgage tool on here and see the difference first..

racing_blue

What worst case scenario are you modeling for interest rates between years 3-5? Could you comfortably afford that? If yes go for the lowest rate now, if no pay a bit extra for the insurance of a fix for as long as need be. That is probably how I would approach it.