New fixed rate mortgage: 2 years or 5 years?

mburns

Hi all, our fixed rate mortgage arrangement is coming to an end shortly, so I'm looking for some views on whether in the present UK economic climate we should commit to a new 2 year or 5 year fixed rate mortgage?

zagubov

Can't advise on your particular needs but we had a similar choice and decisively grabbed a five year one.

worried_jim

Fixed mine for seven years last May. Sleep easy.

kev2009

I would go for as long as you want/can, 5, 10 years.. my view is interest rates really get too much lower and they are already low so if they do go don't it wont be the end of the world but if they shoot up, could be a different story.

My existing 5 year fix is up next year and i'm currently planning to renew for 5 years as they should hopefully see my mortgage reduce significantly i hope and leave me in a better position should the rates rise etc.

Kev

AnotherJoe

There is zero chance interest rates will "shoot up" so that reasoning doesn't work. Why pay (say) an extra £50 a month for five years to ward off a chance of something thats not going to happen?
Anyway You can't make this determination without knowing the interest rates and the costs. When I did this with my daughter last year 3 years was the sweet spot but it could be different for each case.from the numbers I've seen posted here the extra costs of the fees of a remortgage every two years makes them more expensive than three and possibly five but you have to look at the numbers.

FIRSTTIMER

I did a 2 year fix and if rates increase, I can secure a new deal in 18 months time and fix for longer. The two year fixes tend to be good as every renewal I drop into a much better LTV band too.

getmore4less

do the numbers to see what it could cost if rates don't move and how much the rates need to move to break even.

When this is done often a 2y fix has 2x0.25% rise protection built in over the 5y option but it does depend on the details, amount, term, rates, fees, LTV...

greenbee

I took out a 2 year fix about 2 years ago and am currently wishing I'd taken out a longer deal. But there was no way to predict what would happen (although at 1.09% there really wasn't anywhere much lower for it to go). I would, however, have saved myself the hassle of having to go through it all again this year, when I seem to be finding it much harder to work out where the best deal is.

getmore4less

Always look at retention deals and consider them as part of the search criteria

Get it right and you just roll over onto a new deal with same lender.

greenbee

Agree - usually they're better, but this time they're not. Although doing the maths, the cost over the term of the fix vs. the amount of hassle involved in moving makes a difference too!

Thrugelmir

mburns wrote: »

Hi all, our fixed rate mortgage arrangement is coming to an end shortly, so I'm looking for some views on whether in the present UK economic climate we should commit to a new 2 year or 5 year fixed rate mortgage?

Better to make a decision on personal circumstances. The one certainty about the future is uncertainty.