5 or 2 Year

Lord_e55ex

I just wanted to know what people were doing in regards to fixed term mortgages. I have been offered a rate of 1.6% on a 2 year fixed or a 1.99% on a 5 year as a FTB.

Brexit is a big unknown, but I wondered whether people are plumping for short-term to see what happens with interest rates or am i better locking in?

peter12345678910

More uncertainty and delays would suggest interest rates would stay low. So the 2 year, mind you I got a 2 year, than natwest rang for a meeting and gave me a 5 year deal cutting out the mortgage advisor.

Thrugelmir

As a FTB would you prefer the certainty of knowing your monthly outgoings for 5 years. Putting Brexit aside. Interest rates could increase for any number of reasons. Interest rates are still at life support levels. Longer term they will rise. That's a certainty.

getmore4less

Thrugelmir wrote: »

As a FTB would you prefer the certainty of knowing your monthly outgoings for 5 years are higher han they could have been it you had taken a 2 year fix and gone to a lower LTV after 2 years. utting Brexit aside. Interest rates could increase for any number of reasons. Interest rates are still at life support levels. Longer term they will rise. That's a certainty.

I can do the numbers with amount and full term but with 1.6% to 1.99% I suspect there's s 3 rate rise built in.

So longer term they are going up(bold statement) but more than 3 times the standard 0.25% in 2 years is a much bolder prediction.

Dandytf

peter12345678910 wrote: »

More uncertainty and delays would suggest interest rates would stay low. So the 2 year, mind you I got a 2 year, than natwest rang for a meeting and gave me a 5 year deal cutting out the mortgage advisor.

I prefer to think rates could change rapidly at any time either up or down as mr Carney recently advised,

getmore4less

3 times was a guess.

5y @ 1.99%
2y @ 1.6%
On a 25y term the rate to break even over 3y after 2 is 2.28% a uplift from the 2y rate of 0.68% 2.7 rises.

firsttimeworrywart

Hi Lord_e55ex

Your rates are pretty good! We've gone for 5yr @ 2.35% as FTB.

Our MA advised to go with 5yr to have the comfort of knowing what our position would be for a longer duration of time.

Ultimately, up to you I guess.

MortgageMamma

Why not go with a three year fixed? There's plenty of them around if you really look. Its a bridge between the two and five. You never know what can happen in five years, so unless you are stable and know you'll be in your house for that amount of time, prob best to look at a shorter term to avoid costly early repayment charges.

Get some proper advice, it costs very little and would be useful in helping you to decide what to go for

amnblog

Choosing a fixed term based on most likely to be cost effective over a period is simply a shot in the dark.

Fixed term should be primarily based on attitude to risk and future plans.

getmore4less

amnblog wrote: »

Choosing a fixed term based on most likely to be cost effective over a period is simply a shot in the dark.

Fixed term should be primarily based on attitude to risk and future plans.

The cost analysis is part of the risk assessment.

There is a general misconception that longer term is less risky

The risks profile changes, some go up, some go down.