2yr v 5yr fixed

djwood1

Hello,

Our initial 2 year fixed mortgage product is coming to an end and our mortgage provider is offering the following, without any fees;

2.19% fixed for 2 years
2.73% fixed for 5 years

Our initial interest rate was 2.74% over the first two years but we had zero product fee, free valuation and £750 cashback.

Difference between the new rates is £60 per month.

If our provider is offering similar rates two years down the line, am I naive in thinking they will continue to do so in 2020 or do we lock in until 2013?

Thanks :-)

Edi81

No-one know what rates are going to be in 2 or 5 years time.
There are many factors that dictate that rate so you need to look at it on the level of risk you wish to take. Do you have plans on moving in the next few years? This will influence your decision.

Richard_Pia

What's your LTV if you don't mind me asking? It's very difficult to know where rates will be in 2 years' time, with the Brexit situation and existing expectations for further base rate rises. But it is not for anyone to advise you what will happen to interest rates as any prediction could be wrong. If you simply prefer to have longer term security in your budget then the longer term fixed makes more sense. However, you may prefer the opportunity to be able to review your situation in 2 years' in which case a shorter term deal makes more sense. Without knowing your situation fully, it is difficult to say exactly which deal will be best for you.

djwood1

No plans to move. We chose to save a little more initially so we could secure a house large enough to stay in for the foreseeable future.

LTV is 80%. We're 19 months into our mortgage (first time buyer). House purchase price was £245k

I sense that rates may change a little and locking in for a 3 additional years does offer security. Our current mortgage provided continually offers market leading rates so I'm not it is in our interest to switch provider.

Thanks

juniordoc

Do they offer a 3 year fix which could be a good compromise between the 2?
Rather than decreasing the payments could you decrease the term to reduce the amount of interest you will pay overall?

Richard_Pia

Looking at the rates on offer I wouldn't say either were market leading at 80% LTV. In fact I would go as far as saying you could do much better than that.

Have you done a remortgage to another lender before? The process is relatively straightforward, and many lenders will offer free legals and a free valuation. Some lenders will even offer cashback as well.

getmore4less

Which lender those rates are high?

The current differential is at least 2x0.25% rises and a LTV improvement should give a bit more.