Do I take the 2 or 5 year deal?

tellywelly

I have recently agreed a let to buy remortgage with The Mortgage Works and am unsure whether to go with the 2 year rate (1.94%) or 5 year rate (2.24%). The repayment difference is a mere £16. By opting the for 2 year rate I would have to pay £995 at the end of the deal to find another low rate. Am I right in thinking the rates are not likely to drop low enough to better a saving of £995 if I went for 5 years? 

getmore4less

You have missed off the 3 crucial bits of information the amount you are borrowing, the amount you are paying IO or repayment

You also have to factor in the no fee rates and future LTV 

dimbo61

What are your long term plans ?
We are guessing so any advice could be wrong.
This is why it would be a good idea to sit down with a whole of market broker, your accountant and IFA !
Income, age, long term plans, Tax, property and yield, savings, pension, joint ownership, freehold, leasehold, Target tenants, etc

dunstonh

Fixed rate mortgages are not about getting the cheapest option.  They are about certainty.  One gives you the certainty of the amount for 2 years.  The other 5 years.   

Am I right in thinking the rates are not likely to drop low enough to better a saving of £995 if I went for 5 years? 

Interest rates have not been predictable for over 20 years and especially not since the credit crunch.   Rates could still drop as negative interest rates are an option.  Although its likely your mortgage terms would have a zero floor.   Equally, there could be a boom if and when the Covid issue is sorted.   There is a lot of money sloshing around that is being held back.    This could create a boom effect and interest rates could rise to cool it.   There are many scenarios that could see interest rates go either way.   So, you pretty much have to focus on what is right for you.

[Deleted User]

If you are going through TMW then I assume you are using a broker in which case the broker should be advising you on the best option when they know your circumstances, needs, and objectives.