How to decide how long to fix mortgage for?

Pepperoni

How do you decide how long to fix your mortgage for?

We've always just done 3 years for peace of mind, and had been considering doing 5 years this time. The difference between 2yr - 5yr though is around £100 a month and I can't decide how to work out what makes the most financial sense!

pjcox2005

Depends how much certainty you require and the impact to you of a rate rise.


We've to date gone lowest rate possible as currently higher balance and wouldn't cause undue concern to us if rates increased which we considered to be unlikely (and has so far been the case).


If on the other hand you are towards the max you can afford then the cost of that security, which is effectively paying £100 extra per month for, would be worth locking in for a longer time.


I guess the other points to consider is the likelihood of moving (job change, family requirements etc) as you don't tend to want a mortgage which will be fixed for longer than you are potentially in the property as porting isn't always straightforward.

ReadingTim

Whilst you can always pay to get out of a fixed rate period, I guess it depends on how long you want to be tied into that property, or whether your forsee any events which might necessitate a move - living in a one bedroomed flat and wanting to start a family for example.

Unless your budget is particularly tight, or income relatively low, £100 more or less isn't going to make a huge amount of difference on a monthly basis: a night out ot two, a tank and a bit of fuel, three or four takaways....no more. You might feel that is worth it to have the flexibility to move if you so wish...

Hoploz

It all depends whether you think interest rates are likely to rise within that time. And whether/how soon you think it will go above your best rate for the longer fix.

It's a bit tricky right now with Brexit and all ....

Without a crystal ball all anyone can do is guess

But tbh an additional £100 PCM sounds quite a commitment to me!

G_M

* how long will you keep the property?
* how sure are you?
* how much do you value knowing exactly what you'll have to pay for the future?
* how much do you value the flexibility to always find the cheapest mortgage ie switch product or switch lender?
* do you believe interest rates will rise in the future?
* when? and how much?
* how sure are you?
* what are the penalties for geting out of these products early?

The answers to these Qs will direct you towards the appropriate product for you.