Fixed rate mortgage help

bundred85

Hello, my two years fixed rate mortgage is up soon and the lender has offered new deals.

Another two years at 2.69% or 5 years at 3.8%

My question is, what offer is best? obviously the 2 year offer has cheaper monthly repayments but what are the advantages at going on a 5 year deal?

Thanks

doni

The 5 year deal will give you certainty while Brexit hits. It's always a guessing game though as it doesn't mean rates will definitely go up. What is the difference in the two payment amounts for you?

kingstreet

The important thing is what YOU will feel comfortable with?

I tend to avoid academic discussions about interest rate futures with clients when they tell me they want the certainty of payment for the longest possible period.

The alternative is short-term uncertainty. Could you accept that?

Whatever rate you decide on, chances are it is the lowest of its type in the last twenty years.

It's a bit like the question about the house on the North Pole. Whatever window you look out of, the window always faces south and the bear passing by is always going to be white, so rates are always going to be higher at some point in time.

This is how we word our suitability reports;-

You would like to achieve longer-term payment certainty from a five year fixed rate with no repayment overhang on a 30 year term and you understand the monthly cost of a shorter-term fix would have been lower

or

You would like to minimise your monthly payments and achieve the short-term payment certainty of a two year fixed rate mortgage with no repayment overhang, on a 30 year term

Ultimately, it is your decision we are documenting.

bundred85

two year deal is £325 and 5 year deal is £369.

I was unsure if after 2 years I would get a deal like this again and should go for the 5 year deal

kingstreet

Your guess is as good as mine.

Like I said;-

"The alternative is short-term uncertainty. Could you accept that?"

Perhaps you need to seek independent professional advice?