Which mortgage should I go for?

Cookiepops

H and I are both in our 40s and moved house 2 years ago. Our mortgage is for 20 years and was a 2yr fixed rate which is up in June. I contacted the company and they have given us 2 really good offers so Im happy to stay with them as its less hassle and no fees.

For us, due to age, we are keen to try and shave a few years off the mortgage so have been overpaying (which we can continue to do on the new deals)
2yr fixed 1.99%
5yr fixed 2.59%

But we cant decide which one to go for, there is £50 difference so thats £50 month more going into the interest rather than the capital but longer term security on a low interest rate.

Is there any predictions with the BoE base rate? Could anyone advise what they would do? I know ultimately this is only our decision but its just incase there is a thought or reason that maybe I havent though of! Thanks!

stator

How easily can you afford the current repayments? Could you afford if they went up by £100 pcm? £200 pcm?

Cookiepops

we can afford the repayments and same too if they went up. We are hoping to pay 1/3rd of the monthly payment as an additional overpayment.

stator

If I was a betting man I would say you'd be better off with the 2 year product. I took out a 5 year product but my circumstances are different.
No-one knows when rates are going to go up, they obviously are going to go up, but whether it will be within the next 2 years or not no-one knows.
It's a classic gamble really. Lower payments now and risking higher payments later.

Thrugelmir

Cookiepops wrote: »

Is there any predictions with the BoE base rate?

Lenders costs will be driven by wholesale markets i.e. cost of funds. So not just the BOE base rate that you need to monitor.

What's the follow on rate for the 2 year fix?

Do either of the products have upfront fees?

AnotherJoe

https://forums.moneysavingexpert.com/discussion/5454399

In summary I think the odds are strongly in favour of the 2 year because the rates would need to rise a fair whack for a 3 year fix plus the 2 year to be more expensive than the 5. And if you follow the link, you'll find a comment from the Bank of England saying that "when rates rise it will be slower and more gradually than in the past."

Cookiepops

thanks all, we've decided to go for the 2 yr to keep the payments as low as possible - its a gamble, but one we are willing to take in order to keep our current payments as low as possible.