Changing mortgage - what fixed period should I go for?

aetbaar

I know that everyone will have their views on this but I am looking to renew my mortgage and have an option of 2 years fixed at 1.45% 3 year fixed at 1.89% and 4 year at 2.04% all with the same fee of £1000

What would people recommend - I know I will get certainty with the 4 year bug payments are like £150 lower per month with the 2 year deal

As long as rates don't go above like 1.25 % in 2 years then at that point I should be able to secure a deal just over 2% similar to the 4 year one I am being offered now so I would have gained by going shorter term

Now I know rates are deliberately higher for longer term for a reason as you pay a premium to reduce risk but from people I have spoken to it looks like the economy won't recover any time soon and when rates go up it would be slowly so maybe getting to 1.25 could take a couple of years anyway

Any thoughts from people and other things to consider would be useful as I am really confused as what to do here

mrginge

2 years. No brainer.

dimbo61

So many things to take into account.
LTV, age,income, long term plans,term left, savings, pensions.
Are you going to stay in the house for the next 5/10 years ?
Kids !!!!
The BOE base rate has stayed at 0.5% for over 5 years and who could guess that

aetbaar

Thanks for the replies

Will probably go for 2 years as mr ginge suggests

Yes there is a lot to consider in life but right now I just want views on whether it's better to fix for 2 years based on the fact rates should not rise that much or whether to go for 4 years if it is expected rates will rise

From what I have seen and especially with 0% inflation and going into negative there is more pressure on a downward move or keeping them the same rather than upward and I can see them
Being 1% by the end of next year and not much more at which point I could hopefully renew again at a good rate - better than the 2.04% rate I am being offered for 4 years now

Anyway thanks again it's given me some more to think about

gibby9

If you are going for 2 years only it would be worth looking at a fee free deal if on offer? £1,000 fee for 2 years could be more than increased payments of a zero fee deal.

aetbaar

Thanks - I did check this but by staying with current provider I avoid damage to credit history from further underwriting from a new lender and current lender are offering far better rates than competitors by rewarding existing customers and even with the fee it is offset by the monthly savings from the lower rate from existing provider

andyfromotley

How much do you value security and how much are you prepared to pay for it, thats the question.

We have had an unprecedented run of ultra low interest rates, long may it continue, but that doesn't mean it will. And the pace and range of rises when they start, simply cannot be predicted accurately by anyone.

Southend1

How big is the mortgage? £1k seems a lot to pay unless the outstanding balance is very high. It might be cheaper to get a fee free fix with a slightly higher rate.

amnblog

This is generally not about the rates it is about:


1. Whether you want the stability of payment
2. How long it suits you to have that stability for


What is going on it your world that makes knowing where you are with your mortgage payments key to you?


If you don't need the stability of payment and are just trying to pay as little as possible then perhaps a tracker might be worth considering.

aetbaar

Thanks the tracker rates are even better at 0.69 above base so currently 1.19 and as long as rates don't go above 1.25 by march 2017 it could work out better as I don't think rates will rise for another year so I would have 12 months at a low rate and then 12 months at the same as the 2 year or 3 year fixed rate after which I could renew and get another deal

Very tempted by the tracker and can't see rates rising until inflation stabilises and even if it rises it will be gradual

amnblog

Tracker are only an option if you have a way to manage rate rises.