3-yr or 5-yr fix remortgage

prudential

Hi, I'm torn between a 3-yr fix and a 5-yr fix rate with Barclays. LTV <60%.

Both have 3% ERC and both are 1.79%. The 5-yr fix has a product fee of £999. I don't have plans to move but then you never know...

I'm afraid of rate increases and 5-yr fix at 1.79% sounds appealing.

Thoughts?

bigstevex

That's not really for anyone else to answer, it's more personal choice. If you're scared of rate rises and 1.79 is a good deal for your LTV then I know which one I'd go for.

Thrugelmir

The amount that you are proposing to borrow will determine whether such a large product fee is worth paying.

getmore4less

what is the non fee rate?

prudential

2.09% 5-yr fix no fee

vs

1.79% 3-yr fix no fee

vs

1.79% 5-yr fix £999 product fee

at the moment I'm leaning towards the last one...

getmore4less

do the numbers for year 3 and 5

say £900pm in 3 & 5 years

5y £221k @ 1.79% £199,923 £185,230
3y £220k @ 1.79% £198,868

you need a followon 2 year rate after the 3 to match the 5y

2y £198,868 @ 2.069% £185,229

even 5 years is short term.

Most only look 1 deal ahead and in 5 years the rate may be much higher than they were at 3 years.

Taking a 5y now only protects for a 2y window after 3 years at the cost of £1k up front now

FIRSTTIMER

Go with 5 - 1.79 wont be around for long.......if rates go to 0.5

prudential

getmore4less wrote: »

Taking a 5y now only protects for a 2y window after 3 years at the cost of £1k up front now

So I took the 5-yr rate @ 1.79% with £999 product fee and I'm having second thoughts now. I received the full offer yesterday.

This is what I applied for: £218K (£217K+£999 fee) on 25 years, so payments are £902... but I'm planning on overpaying £300 each month via standing order. Basically I plan to pay £1200 each month regardless of what the minimum payment is.

Would I be better off with the 3-yr no fee rate at 1.79%?

And is it too late to change now that I received the offer? I'm in the "7 day reflection period" if that matters at all....

goodwithsaving

prudential wrote: »

So I took the 5-yr rate @ 1.79% with £999 product fee and I'm having second thoughts now. I received the full offer yesterday.

This is what I applied for: £218K (£217K+£999 fee) on 25 years, so payments are £902... but I'm planning on overpaying £300 each month via standing order. Basically I plan to pay £1200 each month regardless of what the minimum payment is.

Would I be better off with the 3-yr no fee rate at 1.79%?

And is it too late to change now that I received the offer? I'm in the "7 day reflection period" if that matters at all....

Given uncertainty with Brexit, I've just fixed for 5 years.

Maybe you aren't pondering the mortgage, but are pondering the sum and big step now it's in writing, maybe? That's normal

AnotherJoe

Rather than overpaying at such a low interest rate (and with inflation around that level*) you should consider topping your pension up. Are you a high rate taxpayer? If so its almost a no-brainer you'd get multiple times the return.


* with high inflation the longer you postpone paying off the better since over time the value of the money you pay with decreases compared to the mortgage as that remain fixed. eg the final pound you pay off in say 25 years time is likely the equivalent of 50p in today's money.

AnotherJoe

goodwithsaving wrote: »

Given uncertainty with Brexit, I've just fixed for 5 years.

Maybe you aren't pondering the mortgage, but are pondering the sum and big step now it's in writing, maybe? That's normal

Brexit is likely to keep interest rates lower than otherwise. The reason to fix for longer should be because you think interest rates will rise, not because of "uncertainty".