Remortgage Advice

UniqeNewYork

I'm currently remortgaging and have the following options.
2 year fixed - 1.23% - £408 pcm
5 year fixed - 1.51% - £424 pcm
10 year fixed - 2.19% - £467 pcm

Tempted by 10 year fix, basing this on interest rates likely to have risen for next remortgage and I like the stability of knowing what the payments will be for next 10 years . No plans to move and I have secure public sector job in education. 20 years left on mortgage. I'm no mortgage/financial expert so if anyone feels lower than 10 fix best option please enlighten me on reasons. Thanks.

dimbo61

Well 10 years is a long time !
Things change, you might move to a new area if you get a better job,
Relationships change, need for more room, Job loss, etc 
What will your LTV be in 5 years ? 
Can /Will you overpay, age, kids, retirement etc all need to be considered

PixelPound

It all depends on where the mortgage rate will be in 5 years time. Unless it greatly increases then two fix fixes may be cheaper. You could put numbers into a calculator e.g. https://www.moneysavingexpert.com/mortgages/compare-mortgage-rates/ to see the difference and see what rate the second 5 year would need to be before you end up paying more. You may be quite surprised how higher the second stint can go before the 10 year works out cheaper. 

Of course in uncertain times a 10 year fix can prove tempting, but as stated it is a long time and whilst your job may be secure, who knows how your life could change, e.g start a family and need a bigger house etc.

It is your choice, and you need to look into all the pro's and cons of a fix. If you ask people will give you different answers. Some prefer security of longer fixes, others try and go for the cheapest rate and remortgage more.

Thrugelmir

How much do you have left to pay on your mortgage? 

Unicorn_cottage

What are the early redemption fees should you want to move/remortgage etc? Are you planning to overpay?

UniqeNewYork

Apologies. Should of put more info.
I'm remortgaging once my 3 year fixed rate ends 30/6/20.
Property is worth £180k & mortgage is currently £124k.
It will be a 30 year mortgage but I'll be paying £650 a month so yes to overpayment. I'm a 38 year old single Dad with 2 kids (8 & 10).
Having read your advice it sounds like maybe a 2 or 3 year fix best option for a few good reasons, particularly as I'll be at or close to 60% LTV at that point and therefore attract better offers.

dimbo61

Consider the long term effects of Covid19.
Banks will need to raise interest rates due to mortgage/Loan defaults 
Long term security for yourself and the kids.
In 5 years you youngest will be 13 

UniqeNewYork

dimbo61 said:

Consider the long term effects of Covid19.
Banks will need to raise interest rates due to mortgage/Loan defaults 
Long term security for yourself and the kids.
In 5 years you youngest will be 13 

Is that a tick in the box for 10 year fix?

blue_max_3

dimbo61 said:

Consider the long term effects of Covid19.
Banks will need to raise interest rates due to mortgage/Loan defaults 
Long term security for yourself and the kids.
In 5 years you youngest will be 13 

That's one factor. Another may be that if people's home value decreases and the interest rate rises, many may default. That's not in anyone's interest. Far too many are vulnerable. The market adjusts to low interest rates, but struggles the other way round. I'd take the cash now (the 2 year fix) and overpay like mad.

dimbo61

Well in 10 years time your youngest would be 18 and maybe heading to Uni.
You might remarry, find someone else with kids etc.
All the rates are good but each persons circumstances are different.
We had a 5 year fix at 4.74% right before the base rate dropped to 0.5% but we were still happy with our decision at the time. Security

blue_max_3

I was on a deal and paying more than we should. Then we got divorced and had to pay 5% of the balance, so never underestimate life changes.