5 or 2 year fixed rate?

T1T2T3T4

Hi guys. I would appreciate your opinions please.

What would you go for? A 2 year fixed rate mortgage at 2.27% or 5 year fixed rate at 2.91% based on a 90% ltv for a first time buyer? We were initially going for a 2 year but with news that rates may be getting worse I'm questioning whether we need to change to 5 years. This would be a for a long term home. Home improvements (e.g. updating bathrooms, knocking wall through kitchen/diner) are planned but aren't guaranteed to happen within two years.

Thank you. 

T1T2T3T4

Any thoughts guys? 

lesalanos

Probably better to post on the mortgages forum

Getting_greyer

If it was me. I'd look at what ltv I'd be at in 2 years if I made no overpayments. I'd also look at how this would be altered if the house value increased a bit, decreased a bit and stayed the same.  This would give me an idea if I'd get a cheaper rate after two years on 85% ltv.  That said, an 85% rate in 2years may cost the same, less or more than a 90% today so essentially guessing game.  What price for peace of mind for 5 years though eh.

lookstraightahead

I've just taken out a 5 year. Might be a bit more but nothing like peace of mind. Bit of a none  decision for me when I've known them get to nearly 15%

HampshireH

T1T2T3T4 said:

Hi guys. I would appreciate your opinions please.

What would you go for? A 2 year fixed rate mortgage at 2.27% or 5 year fixed rate at 2.91% based on a 90% ltv for a first time buyer? We were initially going for a 2 year but with news that rates may be getting worse I'm questioning whether we need to change to 5 years. This would be a for a long term home. Home improvements (e.g. updating bathrooms, knocking wall through kitchen/diner) are planned but aren't guaranteed to happen within two years.

Thank you. 

Depends on your lifestyle /plans.

We last remortgaged to 5 knowing our household would be changing and we had refurb works planned. It was also Brexit. Made sense to commit for longer knowing we could afford it for 5 years and still do what we wanted.

If we went for 2 now with those plans I'd be expecting things to be a lot less affordable when I came to remortgage.

RS2OOO

Don't forget to factor in any arrangement / setup fees which may make the 5 year more attractive than the initial rates imply.

bbat

I'm not a finance person so I can't answer properly. But when I discussed with my broker, it was clear that as my mortgage payment was more per month than my rent had been (rare i know!) I made sens eto do 5 years so I knew it was affordable for that stretch with enough wriggle room. 
So it means you can plan the things you want to do, knowing your monthly payment won't change for 5 years.

hazyjo

I'd try for a 3 year. It's amazing what can change in 5 years.

T1T2T3T4

lookstraightahead said:

I've just taken out a 5 year. Might be a bit more but nothing like peace of mind. Bit of a none  decision for me when I've known them get to nearly 15%

Wow that high? Ours is £150 per month more for the 5 year 

T1T2T3T4

RS2OOO said:

Don't forget to factor in any arrangement / setup fees which may make the 5 year more attractive than the initial rates imply.

They both have a £999 fee.