2 year or 3 year fixed Mortgage

neildt

Our current mortgage (fixed 2.15%) is coming to the end of the fixed rate. I've had a look around and found two possible options, both fixed.

2 year fixed 1.49%
3 year fixed 1.69%

Should I consider 3 years fixed with peace of mind that interest rates *could* go up

getmore4less

How much do you think they need to go up in the next 2 years to be worse off after 3 if you take the 2 years fix.

if you want piece of mind(whatever that means) and think longer term fix will do it why not go for 5 or even 10y

neildt

Both have a £299 application fee. Ok, so considering that interest rates might not go up that much I'm thinking a 2 year fixed would be better.

getmore4less

How big is the mortgage?
What term or planned payment?
What rates are the no fee options?

neildt

The mortgage is about £57000, over 18 years. Those rates without any application fee

1 year fixed at 1.96%
2 year fixed at 1.95%
3 year fixed at 1.99%
5 year fixed at 1.89%
7 year fixed at 2.09%
10 year fixed at 2.40%

ec9wrr

Have you spoken to a broker?

neildt

Actually, the 2-year fixed at 1.95% (without any application fee) works out pretty much the same as the 1.49% 2-year fixed (with the application fee). Taking into consideration the application fee

The overall monthly cost of comparison is

£315.07 (with application fee) per month
£315.90 (without application fee) per month

So I suppose if I want a 2 year fixed, I need to decide if I want to pay the £299 now and have reduced monthly payment or have no application fee and higher monthly payment. Other than that I can't see any other benefit?

Regarding the broker, I have a meeting next week but wanted to get an idea of what is currently available to me.

Stenwold

It's entirely dependant on your personal circumstances and what your priorities are i.e. do you need to fix your budget for the longest period possible, or are you happy to ride the waves of interest fluctuations with the possible benefit of cheaper mortgage deals with shorter terms.


My personal preference would be to fix it in for as long as possible (which I have done) as I have a young family and tight budget controls are important. I could probably get a better deal by looking at a shorter term, but I deliberately avoid checking as ignorance is bliss.


That said, of all the products you listed, the 5 year fix at 1.89% seems to be the best of both worlds.

getmore4less

neildt wrote: »

Actually, the 2-year fixed at 1.95% (without any application fee) works out pretty much the same as the 1.49% 2-year fixed (with the application fee). Taking into consideration the application fee

The overall monthly cost of comparison is

£315.07 (with application fee) per month
£315.90 (without application fee) per month

So I suppose if I want a 2 year fixed, I need to decide if I want to pay the £299 now and have reduced monthly payment or have no application fee and higher monthly payment. Other than that I can't see any other benefit?

Regarding the broker, I have a meeting next week but wanted to get an idea of what is currently available to me.

You can't use the payment to work out what's best

the first stab is rate difference * mortgage size * 2 years
That's the interest only saving
£57,000*2*(0.0195-0.0149)=£524.4
big enough with a £299 fee to work it out for repayment.


£57k 18years
£57,000 1.95% £313.12pm
£57,299 1.49% £302.60pm

How did you get £315.xx for both?


Add the fee and make the payments the same see what's left after 2 years using your figure rounded up.

£57,000 1.95% £316pm £51,538
£57,299 1.49% £316pm £51,338


£200 better off with the fee.
It will change a bit with different mortgage size and payment but not much if £57k and 18y are close

no fee
5 year fixed at 1.89%

whats the 5y fee option?

neildt

Sorry, the £315.xx was miscalculated. The 5-year fixed at 1.89% has no application fee.

getmore4less

neildt wrote: »

Sorry, the £315.xx was miscalculated. The 5-year fixed at 1.89% has no application fee.

I asked what the 5y(with) fee option would be?