Which Fixed Deal Period? Advise Please

Geoff24

Hi,

I am switching mortgage deal next month. I want a fixed deal 5 or 10 years for peace of mind in the post Brexit world.

I wondered what you folks think of going for 5 or 10 years. I have secured a 10 year switch but can change in the next few days if I want before it starts. My lender has increased the 10 year rate in the last few days (so I got the better deal if I want it), but 5 year deal remains (at 2.09%).

I like the idea of no surprises in my payments but of course early repayment charges persist for longer on a 10 year deal (probably ~8k at most if I was in that happy situation).

Be interested to know what people think,

Many Thanks,

Geoff24

Neutrinno

It depends entirely on your circumstance and needs, we can't say one is better than the other. Are you planning to move house in the future? pay off the balance? Make big overpayments? Want to review your mortgage again?

We also don't know what rate you have got with your 10 year one to even try and compare it.

Geoff24

Of Course - 10 year deal was 2.69% (it has gone up to 2.99% in last few days).
I am happy with my current provider and have an overpayment reserve I want to preserve.
Not planning on moving just now but life can change. I plan to try and pay off penalty free allowances (10%) each year (as and when I have money) on top of my (manageable) monthly payments. I guess I am wondering what peoples view of the economy is and which way interest rates could go post Brexit.

AnotherJoe

Geoff24 wrote: »

Hi,

I am switching mortgage deal next month. I want a fixed deal 5 or 10 years for peace of mind in the post Brexit world.

I wondered what you folks think of going for 5 or 10 years. I have secured a 10 year switch but can change in the next few days if I want before it starts. My lender has increased the 10 year rate in the last few days (so I got the better deal if I want it), but 5 year deal remains (at 2.09%).

I like the idea of no surprises in my payments but of course early repayment charges persist for longer on a 10 year deal (probably ~8k at most if I was in that happy situation).

Be interested to know what people think,

Many Thanks,

Geoff24

What peace of mind is that? That you'll likely be paying an extra 1% for the life of the mortgage than you need to? That you'll be locked in with a whacking ERC (will the mortgage be portable?)

Brexit me indicates rates would stay low as long as possible as they can be held, since its in the interests of the UK economy in many aspects to have low rates.

dimbo61

5 years is a long time ! 10 years is a Very long time
Will you need to move for work ?
How old are you ? The kids ?
What kind of house do you own ?
Can you extend ?
When do you plan to retire
Savings, job, age, pension, overpaying all must be considered.

Thrugelmir

Geoff24 wrote: »

I guess I am wondering what peoples view of the economy is and which way interest rates could go post Brexit.

Interest rates are at historical lows due to the GFC. Over time they will normalise. Brexit itself is just one factor, albeit a recent one that may influence future events. The UK is highly indebted (Government and Consumers). There's a high balance of trade deficit. There's a budget deficit with a black hole that needs to be filled. How long will overseas investors be happy to lend to the UK at low interest rates. will the Fed raise rates next month, and how soon again after that.

As for the UK economy. Real growth is highly dependent on consumers. So best described as uncertain, fragile and unbalanced.

zagubov

Five years is a good length. We looked at a seven year fix at 1.99% as well. But 10 years at 2.69 seems long and might start to grate on you.

We're in our forever house so not needing to look around. If you're not in your forever home, five ( or even seven) would be better than ten.

Geoff24

Thanks all for your comments

Funny - I still think of these rates as low (I had my first mortgage in the late eighties at rates of ~15%) and always have the fear of that.

My mortgage is portable and with 10% overpayments each year I could reduce it in manageable steps. I have a part and part and its the interest only part I want to really get down.

You may think I am overly cautious but I've recently been through a divorce that came out of the blue (sadly) and lost such a lot. Rebuilding my life but I guess fear the unpredictability of life. A longer term mortgage with known (and affordable) payments would bring me peace of mind. I realise it's a balance.

Interesting that they've upped the 10 year rate in the last few days - perhaps a sign of the view changing. Personally I can't see interest rates staying this low for much longer. And if (when) they rise there may be saving options for making money work better if I have a lower fixed rate.

I am feeling maybe 5 years is a sensible timeframe as many of you suggest.

Many Thanks,

Geoff24