Which is cheaper? Renew 2yr fixed, or a 5 yr fixed?

pavsid

I can't find anything online about this, most talk about the difference between fixed and variables, or trackers, and whether a fee or no-fee mortgage is cheaper.

But, my question is: Is it cheaper to keep renewing/remortgaging a 2yr fixed mortgage (every 2 years), or just get a 5 year fixed?

..Taking into account the fee each time you renew the 2yr fixed?

Here's what I've found:

2yr fixed - 1.35% - £895 fee
5yr fixed - 2.44% - £995 fee

Assuming the 2yr fixed deal is the same each time you need to renew it, which is cheaper over the course of 5 years?

Thanks

Typhoon2000

It will depend on your outstanding balance and term.
Unless your outstanding balance is very small, the two your fix is cheaper assuming mortgage rates available don’t not change in the future.

pavsid

Typhoon2000 wrote: »

It will depend on your outstanding balance and term.
Unless your outstanding balance is very small, the two your fix is cheaper assuming mortgage rates available don’t not change in the future.

How do I work it out correctly? My current o/s loan is 97500 over 18 years.

getmore4less

It is relatively easy you just do 3x2 year fixes in a row against the 5 year fix.

Adding fees and making the payment the same.

5year fix at Y2 Y4 Y5
£98495 2.44% £564pm £89,558 £80,175 £75,309
1st 2y
£98395 1.35% £564pm £87,374
2nd 2y
£88269 1.35% £564pm £76,971
3rd 2y for just 1y
£77866 1.35% £564pm £72,114

Chances are the no fee versions are better.

csgohan4

getmore4less wrote: »

It is relatively easy you just do 3x2 year fixes in a row against the 5 year fix.

Adding fees and making the payment the same.

5year fix at Y2 Y4 Y5
£98495 2.44% £564pm £89,558 £80,175 £75,309
1st 2y
£98395 1.35% £564pm £87,374
2nd 2y
£88269 1.35% £564pm £76,971
3rd 2y for just 1y
£77866 1.35% £564pm £72,114

Chances are the no fee versions are better.

Don't forget when you remortgage you have solicitor/conveyancer and/or valuation fees to pay as well adding more to the short term fixes.

getmore4less

csgohan4 wrote: »

Don't forget when you remortgage you have solicitor/conveyancer and/or valuation fees to pay as well adding more to the short term fixes.

I just assumed the renewing scenario retention deals with the same lender.

no fee rates need to be looked at each time many lender pitch the break even at bigger mortgages than this.

pavsid

getmore4less wrote: »

It is relatively easy you just do 3x2 year fixes in a row against the 5 year fix.

Adding fees and making the payment the same.

5year fix at Y2 Y4 Y5
£98495 2.44% £564pm £89,558 £80,175 £75,309
1st 2y
£98395 1.35% £564pm £87,374
2nd 2y
£88269 1.35% £564pm £76,971
3rd 2y for just 1y
£77866 1.35% £564pm £72,114

Chances are the no fee versions are better.

Have you got your own funky calculator to work that out? I noticed although you've put the interest rate in, you're still working it out as though the monthly payment is 564 - how?!

somethingcorporate

If the rate, balance and (total) term are all the same. The payment would, of course, be consistent.

getmore4less

pavsid wrote: »

Have you got your own funky calculator to work that out? I noticed although you've put the interest rate in, you're still working it out as though the monthly payment is 564 - how?!

for a one off like that I use

http://www.whatsthecost.com/mortgage.aspx

just use interest only and a payment

if I was doing more calculations with some interest rises a simple spreadsheet would be worth the effort

The key is the payment in these calcs mortgages are really based on amount, rate and payment not term as many calculators use.