Is it worth cycling a two year fix at 80% LTV

FIRSTTIMER

Hi,


I am wondering whether to continue to keep doing two year fixes with my mortgage given rate rises or take out a 5yr plan.


I will no doubt dropt LTV every two years at 5% (currently 80%) thus get a better rate then fix maybe for long term. I don't want to fix for five years at 80% LTV then miss out on say 65-70% LTV maybe at year 4/5 of the fix due to price rises and overpayments.....thoughts? What is the best option? #crystalball


Only a small mtg circa 140k ish

ACG

5 year fixed rates are quite competitive at the minute compared to 2 year fixes. So you may miss out on LTV reductions, but it may still end up being better in the long term.

I sent a customer 3 figures on friday - lower LTV than yours but this just shows the difference:
2 year fix - 1.99% - £590
3 year fix - 2.04% - £592
5 year fix - 2.14% - £598

So for the sake of £96 a year for the first 2 years, they are protected against rate rises.

As it happens they opted for a 3 year fix as they plan on moving in 4-5 years so they would prefer to not be tied in when the time comes. But it is really just a case of doing the sums and seeing which works for you.

getmore4less

You need to look at the predicted reduction in rates due to improving LTV

you can then crunch the numbers for 2 year options against a 5 year and see what rate rises will make you worse off.


different lenders have different sweet spots where the next reduction for LYV is small/zero

Thrugelmir

FIRSTTIMER wrote: »

Only a small mtg circa 140k ish

Large enough to be impacted by rising interest rates.

getmore4less

Don't forget a lower rate pays the debt off faster even though the payment is lower.

FIRSTTIMER

Interesting - thanks for all this advice. I am looking at fixing with possibly 3/4 years max. I also may want to move/transition to buy to let in the future on this house.
HSBC and Tesco 3 yr deals look good for me.