Fixing but for how long?

TopCat1978

We are currently remortgaging as our 2 year fixed is up. We are transferring to TSB as I was attracted by their Fix and Flex mortgage - fixed for 10 years but can leave after 5 years as this is when the ERPC disappears. But if rates have gone up we can stick with it and overpay.

However, we went to the bank today and the adviser did some illustrations. The two options are:

5 year fixed at 2.24% monthly payment £701

Fix and flex fixed for 10 years at 3.09% payment £768

My worry is that rates may have increased in 5 years, I can't see it going down!. I appreciate no one has a crystal ball to see into the future but I wondered what people thought!

Thanks in advance and sorry for the questions when I don't do much posting!

amnblog

Both are well off the pace of the best rates available on the market unless you are high loan to value.

getmore4less

If you are thinking again, look at other options start with the best of the retention offers from your current lender.

For those 2 rates you can look at the known data points 5 and 10 years

would help you know what you are borrowing and any fees probably somewhere around £156k over 24years as rounding of the monthly payment put the amounts into a range

Paying £768 on £156k with both rates

in 5 years you will owe around

2.24% £125758
3.09% £132266

in 10y on the 3.09% £104573

to break even over 10 years you would need a new fix at 5y of 4.3% an increase of 2.06 over current 5y fixed.

any fees at y5 would make the break even rate lower.