Mortgage Newbie - Fixed Term periods

JamieB3009

Hi,

I am looking for my first mortgage and would like some guidance regarding fixed term durations.

I have been given quotes by a broker for a 2 year fixed at 1.74% initial or a 5 year fixed at 2.04% initial.

I keep reading that interest rates are predicted to increase, especially if Brexit sorts itself out. I don't plan on leaving the house in the next 5 years or so, but would like to know if a 5 year deal is likely to be better value than the 2 year? E.g. would a 0.25% increase in the bank of England base rate in the next couple of years result in higher fixed rates when remortgaging after a 2 year fixed period, than if sticking with the 5 year rate for longer certainty. Plus, i would assume i would have to pay additional arrangement fees after 2 years if remortgaging. I would be keen to hear peoples experiences?

pramsay13

There is a lot of ifs, buts and maybes but the only reason I would fix for the 2 years rather than 5 there is if I was planning on moving or if I thought the interest rates would drop.

If the 5 year is affordable and you think interest rates will stay the same or rise it would be worth fixing for the 5 years.

amnblog

Consider

How long you intend to be in the property - all things being equal
(this sets the maximum term of product to select)

How long you would prefer to have the stability of a fixed rate
(this indicates the suitable product term)

Anything else is second guessing the market, and may prove advantageous, or may not.