2 or 5 yr fixed

simpson_77

Hi,

Just want to see what the feeling is regarding interest rates.

Moving house and got the choice of a 2 or 5 yr fixed @ 1.54 & 2.04 respectively. Is the general feeling to go for a 5 year based on the fact rates are bound to go up? Or should I take the lower payment (£120p/m ) from the 2 year on the basis that if rates did rise they wouldn't move that quickly?

whats the consensus?

Thanks

getmore4less

Crunch the numbers properly

£120 pm will not be the real difference

Exodi

With the exception of finding a working crystal ball, no one can tell you this.

It's really security v potentially saving money and only you can decide which is more important to you.

Do also remember that there will be costs associated with remortgaging and a 2 year fix will mean you will be remortgaging more often.

I fixed for 5 years FYI.

simpson_77

I was leaning towards the 5 year too. Interest rates will only go one way!

tacpot12

2.04% is a very low rate of interest for a mortgage. I would pay the extra amount for the peace of mind of knowing that your payments cannot increase for five years. Your mortgage would have to be £600,000 for the difference to be as much as £120.

AnotherJoe

simpson_77 wrote: »

I was leaning towards the 5 year too. Interest rates will only go one way!

Lets revisit that in a years time.
Brexit & Eurozone financial problems all point to next most likely move is down.

simpson_77

AnotherJoe wrote: »

Lets revisit that in a years time.
Brexit & Eurozone financial problems all point to next most likely move is down.

This is my quandary, but rates cant go down much further + more likely to be a soft brexit (if at all) which will keep rates on hold or increase!

+ don have to worry about remortgaging every few years and how potential credit purchases (cars) might affect affordability etc

Ian_875

simpson_77 wrote: »

This is my quandary, but rates cant go down much further + more likely to be a soft brexit (if at all) which will keep rates on hold or increase!

+ don have to worry about remortgaging every few years and how potential credit purchases (cars) might affect affordability etc

We've just fixed for 5 as FTB because I'd like to know where we stand each month for a good amount of time. A mate of mine fixed for 2 and he's recently commented how quickly those 2 years have wizzed by.

AnotherJoe

simpson_77 wrote: »

This is my quandary, but rates cant go down much further + more likely to be a soft brexit (if at all) which will keep rates on hold or increase!

+ don have to worry about remortgaging every few years and how potential credit purchases (cars) might affect affordability etc

A soft brexit has no implications for rate rises.

Separately, Eurozone problems imply they will fall which will ahve the effect of at worst keeping rates the same.
Its true rates cant go down much, but I dont see why thats an argument to pay more than you need to.
I think a stronger reason to go for a fix is the arrangement fee. Paying a chunky fee every two years may well come to the same as a high 5 year fix, you'd have to do that maths.My feeling is that 3 is the "sweet spot" but it obviously depends on exact numbers.
I've never understood the comment people make that "I like to know what I'll be paying" - Really? Even if its more money every month for the next 5 years...?

zagubov

We've fixed for 2 years twice and 5 years twice.
We regretted the 2 year fixes and never the 5 year fixes as it turns out we found we value certainty and predictability over flexibility.
What do you value most?

buttonmoon

I’ve just gone for a five year fix as there was only £40 difference per month. Im at the small children stage where expenses are high so 5 years will take me past that stage