5Y or 2Y fix on additional borrowing?

MeltingSugs

Got 180k or thereabouts on a 3.73% fix til Dec 2020 this was a 5 year fix intially.

We are moving and porting current deal, and borrowing about an extra £70k. Our options are 2Y or 5Y fix, expiring Aug 2019 or Aug 2022.

2 year with fee is 1.72%
5 year with fee is 2.73%

Hoping this will be a 10 year + house. Basically unsure whether we should take a 5 year or a 2 year meaning we can lump the two together and remortgage quicker.

I don't expect to be able to make huge overpayments and I don't think the value of what we will buy will rocket. Our current place's value did so in hindsight if we had stayed we could have remortgaged to a considerably better deal. But as we don't think we plan to move, should we take the 5 year fix..? If we do then the bigger amount will be on SVR for longer than the smaller chunk of we took the 2Y, which kinda feels riskier but timing wise re economy and interest rates I'm not so sure.

Fee is £995 and we will add it on but hopefully pay it off via overpayment sharpish...thanks to anyone who has any thoughts?

getmore4less

for the £70k look at the no fee deals they could be better.
the £180k will probably be better with the fee options for some time.

does the lender not have any 3y deals?

You could take the 5y and then refix for 2y on the bigger bit that would bring the gap closer Aug&Dec 2022 4months.

Some lenders let to switch early so look at that as well you might get the gap down to 1-2 months

Another option to consider is take the lower rate for 2 years and use the savings to overpay the higher rate.

You need to run a few scenario to see what the number look like and the real cost of the trade offs.

Another option is to borrow more than £70k if it does not ruin the LTV and over pay the higher rate even more moving some of that £180k from 3.73% to 1.72%.


Can help with the number crunch but need more details like how much are you payments and how much do you think you can afford total £pm

MeltingSugs

Would love some help with the number crunching please!

Currently monthly repayments are £975 a month on the £183k lump. We are borrowing £77k as opposed to closer to £70k - had so many bits of paper with different splits on! The options for that are:

2 Year:
1.72% with fee of £995
2.88% with no fee

5 Year:
2.73% with fee of £995
3.58% with no fee

No 3 year deals unfortunately. This is 85% LTV.

I think when I spoke to the mortgage advisor she told me the 2 year with fee was 2.88% and then said the 2.73% worked out cheaper, which of course it does. But she didn't mention the 1.72%. Now I've dug out the products we were told were available from a phone call a few weeks ago, I am not so sure we have gone with the most sensible option...

getmore4less

going out today so will not have time to go through options.

but on the basic 2y deal £77k over about 24 years would be around £382pm
in 2 years you owe
£77000 @ 2.84% £72,134
£77995 @ 1.72% £71,402

fee deals are better,

most lender the differential is much smaller.