To Fix or not to Fix

KCailey

hi,

Some advice please, here is my situation.

Over the last 2 years I have been paying a little extra into my mortgage every month plus a lump and its made a significant dent.

My current 2 year deal is coming to an end and I have been thinking about a long term fix and paying the mortgage off in 10 years.

I came across this first direct offer: 2.49% fixed for 10years/term, no fees
Representative example: A mortgage of £170,000 payable over 10 years, initially on a fixed rate for 120 months at 2.49% would require 120 monthly payments of £1,601.82. The total amount payable would be £192,403.00 made up of the loan amount plus interest (£22,218.00). The overall cost for comparison is 2.5% APRC representative.

vs

5 x 2 year fixes, best case the rate will be <1.5% and +-£2500 in fees over the 10 years.
Per month, you repay
assuming your interest rate 1.3% stays the same
£1,512
Total you'll repay over full term
(Includes mortgage debt, £170,000 + total interest £11,401)
£181,401

Am I missing anything here? What are the major cons to a long term fix?
thank you

foxy-stoat

Early repayment charges are the biggest downside for a long fix if you decide to move or have to sell.

Mortgage interest rates will only go up but only by small amounts, no idea when.

Choice is all yours, save a percent for a few years until the rates creep by doing 5 x 2 year fixes and have a little flexibility or fix for 10 years and sleep well knowing your interest rate will not change - the only time you will feel sick if interest rates do not go up for 5+ years and you would of been paying more interest than you needed to but will feel very smug if interest rates go up by more than 2 percent.

If your risk adverse then fix for 10 years - or just do 2 year fixes and if interest rates creep up after 2 or 4 years then fix for 10 if the deals are there.