2 year or 5 year deal?

Useless_ukpc

Hi all

I have been offered both a 2 year and 5 year deal and the annual cost is a difference of £100 more expensive on the five year view.

I am thinking of the two year deal but wanted some views am I being to bullish? 

I am presuming nothing will change in the next two years and potentially will get an even better rate in 2 years as the ltv will be below 60% by then.

Not looking to move in the next couple of years but never say never. 

Thank you for your time and comments! 

london21

I am doing a 2 years fixed and 5 years after because the LTV will be better then but depends on your circumstances.

If no changes in 5 years, or can do 2 years and see how things go.

With the Covid19 situation etc, I personally do not think rates will go up in the next 2 years. 

Windofchange

I’m also coming up to remortgage time and am likely going two years. This is more based around being able to get a better LTV to then go on five years in 2024. I also do not think rates are going anywhere up or down, but if the difference to you is £100 a year it is pennies and for me I may we’ll be tempted to go for five just incase something happens. Nobody knows what rates will do so the decision is really down to whether you see yourself moving anytime soon, and what life changes you may have. 

Antman27

I'm no expert but The Guardian did report just last week that BoE may consider increasing interest rates if inflation remains high next year. I recently went for a five year because I'm planning to live there long-term and don't think the rates will substantially improve (if at all) over this period.     

getmore4less

if you give the numbers can work out what rate change will make you worse off.

Lender, amount, rates, payment, full term, LTV. 

ritz55

Just keep in mind on a 2 year deal, you may end up paying an arrangement fee after the 2 years are up to get onto a new deal or a new remortgage

dimbo61

If you said the Monthly difference was £100 I might have said take the 2 year deal but £100 a YEAR.
Are you planning on moving in 2 years ?
Rates have never been this good 

sevenhills

Useless_ukpc said:

I am presuming nothing will change in the next two years and potentially will get an even better rate in 2 years as the ltv will be below 60% by then.

No one knows what will happen within two years, the Guardian are predicting a stock market crash sometime this year. But it's just guesswork.

If you are happy with the uncertainty, go with a two-year deal. I got a ten-year deal four years ago. I may end up paying more, but I have the certainty of knowing my rate will not increase.  Interest rates have been predicted to rise in twelve months time, for five years.

diggingdude

I'm 2.5 years into my 5 year fix. In some ways it would be nice to be changing for a lower rate but it has been reassuring during the last couple of years knowing exactly what I will be paying. I guess it depends how stable your employment is as well 

bmthmark

I just signed up to 5 year fixed rate of 0.99% (60% LTV). I'm really happy with the low rate and has dropped my monthly mortgage payment by £120. This will be added as an overpayment.

I noticed today HSBC has lowered rates again. 5 Year fixed rate 0.94%. Too late for me, but a very good deal

Useless_ukpc

Hi every one thanks for your comments

I have decided to go with then 5 year deal over the 2 year offer

I was offered 5 years at 0.99 with 749 fee monthly payments of 1,088 or
2 years at 0.84 with 749 fee monthly payments 1,075

The difference on an annual basis was actually 150. And paying the fee upfront rather than tacking onto the mortgage is recommended when ever possible.

Now why did I opt for 5 years?

1) Not planning on moving.

 2) Looking to get the bathrooms refurbished and thinking about painting the hallway as it's a little tired.

3) Inflation is a fear longer term but I don't know what effect that will have on interest rates.

4) I like the certainty of the longer term.  Conscious that "if" nothing changes rates "may" still be low and a slightly better rate might be on offer. I feel the potential is to small.

Thanks to all that contributed and I hope this helps anyone else who is trying to decide between mortgage terms.