2 year fixed or 5 year fixed?

daniellelucy

I am in the process of selling my shared ownership property and buying a house with my partner.

The house is only a 2 bed and will likely only work for us for 3-4 years as we already have one baby and would like another in the future!

Do we get a 2 year fix or a 5 year fix? Ideally we'd like to fix for 5 but I'm unsure what happens if you move house prior to the end if the mortgage fixed term? Are we better off getting a 2 year fix and seeing where we are in 2 years? It'll be an 80% LTV.

Any advice would be great

gaz_moose

you would port the 5 year mortgage if you moved. although it sounds like you would be best to take the 2 year or a 3 year deal.

supa34

The interest rate can't go any lower. I know it's uncertain times but 5 years is a long time. The economy might pick up and interest rate rise, or it will stay the same, worse case it can go worse. But interest rates are lowest they have ever been. I would do 2, with brexit I can't see things improving in 2 years. After 2 years ask again.

Nathan_Hughes

If you do decide to go for a longer fixed rate, check that the deal has a portability option. If it does, you can move homes with the same mortgage deal and will save on not having to pay an early repayment charge. It will just stay on the fixed rate. :j

[Deleted User]

Lots to take in to account here and porting isnt as simple as it sounds. I had a case the other day who took a 5 year deal 3 years ago with the intention on moving and porting. When we crunched the numbers, the existing lender wouldnt lend enough but there was another lender who would.
To get the new home he had to pay a £7k exit penalty.

So, are you borrowing right at your max with the current lender or is it likely(not guaranteed) that they could lend more in the future (subject to the criteria of the time).
If so then you may want to consider the benefits that the longer term security can bring you.

If you want to avoid the risk of paying a penalty to come out of a mortgage then a shorter term fix may be more appropriate. But then you dont get the security that the longer term ones offer.

To throw a cat amongst the pigeons, how about a 5 year fixed rate with no penalty to leave early? Is that something you have considered?

The benefits of seeing/speaking to a proper mortgage broker is that they will have a full discussion around which of these points worries you and which ones you dont care about and be able to advise you properly as to the most suitable product.

Also - I have been hearing people say 'interest rates cant get any lower' for about 3 years now yet 5 % deals are the cheapest they have ever been and now sit under 3% for a lot of them. We just cant guess whats going to happen with the market which is why security of payment is important to a lot of people

dimbo61

If you are 80% LTV now could you be 75% in 2 years with Overpayments ?
Depends on your income and spending

getmore4less

People were saying rates can't get any lower when they were 0.5% but they did.

It a sloppy conclusion from flawed or no risk analysis which should be looking at all three options on rates.

For someone looking at a short term house move costs of rate chances dwarf the other costs to the moint of being noise.

buttonmoon

I’ve just gone for a 5 year fix but I’m buy a 4 bed so won’t need anything bigger. It was only about £50 more expensive than a 2 year fix and it’s important to me that my mortgage doesn’t go up whilst I’m paying nursery fees.



Could you