fixed rate mortgage length

lee26g

Hi,

While rates are low, is it worth locking for as long as possible?

Lee

libf

Watch out for large fees on the long fixes at low rates. Definitely use a mortgage comparison tool which includes those fees. And be sure that you don't want to move in the time frame of the fix if there are early repayment charges.

csgohan4

Don't forget to factor in conveyancer, Valuation fees, Broker fees, Remortgage lenders fees and stress every 2 years for remortgaging.


I personally took a 5 year fix for 2.79% for 80% LTV. The interest rates will rise over the next 5 years for sure, IMHO. Saves me the hassle of cost and stress. I can overpay if I want when I want.

PixelPound

You will get many different opinions, some will say we are highly unlikely to get a rate change within 2 years or at most a quarter of a percent - so going 2 year fix is good. How will the EU referendum effect rates? A rates spike might not be great if your fix just ended.

Its personal preference. We are going 5 year fix as the difference wasn't much, and we are likely to be FT&OTB so we can just get on with life without worrying over rates.

Dird

nic_c wrote: »

We are going 5 year fix as the difference wasn't much

What do you class as not much? If I ask for a 2y (swapping to a 3y at the end of period) it will save me about £1200 if rates/fees don't rise in the 2 years

stator

If rates don't go up in the next two years you might still find the fixed rates in 2 years are higher than they are now. The rates don't just start at the base rate and add on a certain amount, they are based on the current base rate and the expected base rate in the next 5 years. So if in two years time the base rate is the same but expected to rise imminently then the fixed rates will be more expensive than they are now, because at the moment they include the probable but not imminent rate rises.

Compare the cost of the mortgage. If a 5 year fixed rate is close to the amount that you can afford, then fix and you won't be risking them going even higher. If you fix for two years and then find rate go up a little, the new fixed rate deals will be more expensive than they are now, so could cause you trouble.
If you take the 5 year fix, calculate what your LTV will be in 5 years time because if your LTV is significantly lower you will qualify for a better deal.

Dird

The highest rates from yorkshire seem to be 65% LTV so no change there. but % increase won't wipe out the £1200 savings alone...only if combined with the cashback deals being removed & exit fees higher than expected

PixelPound

Dird wrote: »

What do you class as not much? If I ask for a 2y (swapping to a 3y at the end of period) it will save me about £1200 if rates/fees don't rise in the 2 years

Ours is a low mortgage so monetary difference was small, rates were quarter of a percentile. Our mortgage for a 2 bed semi-detached house will be less than we currently pay for rent on a 1-bedroom flat with no double glazing, storage heaters and high energy bills. Five years allows us to renovate it, change jobs,and not have to worry about re-mortgaging. Our lives have been on hold for the last year, so not in a rush to repeat it.

It is all about personal circumstance and priorities, which is why you really can't ask whether a 2 or 5 year deal is best. If the sole aim, was what's the best deal financially, assuming everything is standard, no complications etc, then a 2 year would be best because I believe that at most there will be a quarter percentile increase. Though its possible there won't be any increase, because whist the members on the BoE committee do keep saying a percentile increase is needed, the downward trends means the potential increase keeps getting delayed.

getmore4less

Don't rule out a good tracker.

The lower the rate you get the more you can overpay.

Best protection against rate rises is a smaller debt.

alipops1986

Completely agree with what has already been said.

We have just locked in to another deal with Nationwide from September. Our circumstances have changed in the last 2 years as we've now got a 10 month old, so childcare costs and i'm now going to be working 4 days not 5 days plus we got a new car last year! So, we decided we wanted to avoid any affordability checks just in case. Fortunately, the rates offered by Nationwide were really good for us.

We currently pay £846 a month for our 4 bed detached house which we love and bought nearly 2 years ago now. We have no intention of moving but will be having another child over the next 3 years which may mean I drop another day at work in the future. We've recently had a new kitchen and also plan to have a new en-suite in the next year. We were mainly focussed on the 5 year fixed deal, but this was actually pretty much the same as the 10 year fixed - both of which worked out at £120 a month cheaper than what we pay now! So, we decided to put our circumstances before anything else and have opted for the 10 year fixed, we are saving money on the monthly payment and know we can afford this going forward - that was the most important point to us. Plus, it means we don't need to worry about affordability/rate rises we can just get on with our family life.

We didn't anticipate being able to save much money per month but it appears that Nationwide have re-valued our house on their system to be worth £23k more than we paid for it 2 years ago, which meant we had a much better LTV than we anticipated.

Agree with the others, our decision may not have been the most "moneysaving" long term but it provides the security we are after at this stage.

Alipops x