5 or 2 year fixed rate?

yllop1101

lookstraightahead said:

T1T2T3T4 said:

london21 said:

T1T2T3T4 said:

london21 said:

I opted for 2 years fixed because if change in my circumstances and would hate to pay ERC also hoping for a better LTV due to home improvements I am doing. But if you do not need to release equity and want certainty 5 years might be better. 

Are you planning big house improvements? We want to start updating things too but don't know how much we would get done in two years

Wasn't massive but my property purchase was via auction and cuurently nearly maxed out my borrowing threshold based on my income.
I am hoping the property would be valued higher in 2 years (area is due croassrail in 2022) and can get a better LTV and rates.
I might want to release equity.

I did the kitchen and bathroom
moved the boiler from the box bedroom to the kitchen 
new carpets for the stairs and landing and other bits got done.

After the 2 years likely do 5 years going forward.

You've done lots! It will definitely be worth more with all that 

Internal work doesn't usually increase the value of a property.

Hmm I just managed to appeal a desktop valuation on my remortgage- Nationwide estimated at 319k and I got 335k approved by listing all the work (some external like roof refelted and new gutters/soffits, but then internal too like french doors fitted, replastered walls, wooden shutters, bathroom refurb) plus linking to some nearby sold houses for similar. 

milkskae873

5 years for a peace of mind!

Sistergold

Rates will always go up and down in the life of a mortgage so if you have decided you want to buy on mortgage it’s not something to be “afraid” of. So once you accept rates will fluctuate I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on. Two years is manageable I think gives one a chance to move on if need be. 

lookstraightahead

Sistergold said:

Rates will always go up and down in the life of a mortgage so if you have decided you want to buy on mortgage it’s not something to be “afraid” of. So once you accept rates will fluctuate I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on. Two years is manageable I think gives one a chance to move on if need be. 

I suppose it depends how big your mortgage is and how long you 'intend' to be there.
the problem is that it's been a while since interest rates increased, or indeed have been at higher levels,  people don't think longer term. I remember them going up to 15%.
my mortgage is tiny now but I've been through some right old interest changes.

MobileSaver

Sistergold said:

I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on.

The other side of the coin is that with so many variables not in your control it can make sense to have some stability and control over one of the most essential parts of your life, i.e. the roof over your head.

It's also a simple fact that the vast majority of people stay in their home for well over five years so you'd have to be a particularly "glass half empty" type of person to be planning your future on the basis that you may want to move again in just one year!

getmore4less

The key thing not dealt with is why are your rates so high at 90%?

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?

Which lender?

how much are you borrowing?(to check fee no fee) 

a few mainstream 2y rates

1.82% £745 Santander

1.97% £999 Barclays

1.81% £999 Nationwide

1.82% £995 Natwest

1.72% £999 HSBC

...

T1T2T3T4

saajan_12 said:

Lots of people speculating on future interest rates here, but remember traders have already done that, and broadly account for the expected change in rates in the 2yr and 5yr offers. If the market expects rates to rise to a point, that'll drive the 5yr levels higher, but remember you're paying that higher number for the initial years too. This is all based on what the market thinks, evidenced by supply & demand settling at a certain point, but no one really knows 100%. 

So I wouldn't be trying to second guess rates, but rather focus on what matters to you. eg
* certainty on your outgoings as you'll be on a fixed income -> 5yr
* flexibility to overpay more than 10% (and possibly reduce your LTV / rate) -> 2yr
* flexibility to move within a few years (and freedom to change lender, not just port) -> 2yr
* avoid stress of another application, especially if circumstances change -> 5yr
* avoid stress of paying a high mortgage for longer / ERCs, especially if circumstances change -> 2yr

Thanks for this 

T1T2T3T4

lookstraightahead said:

Sistergold said:

Rates will always go up and down in the life of a mortgage so if you have decided you want to buy on mortgage it’s not something to be “afraid” of. So once you accept rates will fluctuate I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on. Two years is manageable I think gives one a chance to move on if need be. 

I suppose it depends how big your mortgage is and how long you 'intend' to be there.
the problem is that it's been a while since interest rates increased, or indeed have been at higher levels,  people don't think longer term. I remember them going up to 15%.
my mortgage is tiny now but I've been through some right old interest changes.

Wow 15%! 😳

T1T2T3T4

getmore4less said:

The key thing not dealt with is why are your rates so high at 90%?

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?

Which lender?

how much are you borrowing?(to check fee no fee) 

a few mainstream 2y rates

1.82% £745 Santander

1.97% £999 Barclays

1.81% £999 Nationwide

1.82% £995 Natwest

1.72% £999 HSBC

...

We've gone through a broker. We're borrowing quite a lot. Those rates look great. I'll pass them on to my partner and see why that is. 

lookstraightahead

T1T2T3T4 said:

lookstraightahead said:

Sistergold said:

Rates will always go up and down in the life of a mortgage so if you have decided you want to buy on mortgage it’s not something to be “afraid” of. So once you accept rates will fluctuate I just find 5 years toooooo loooong to fix. So much in one’s life can change even in year one eg terrible neighbours move in, just want to move house mood, job change, life change, interest rate changes, list goes on. Two years is manageable I think gives one a chance to move on if need be. 

I suppose it depends how big your mortgage is and how long you 'intend' to be there.
the problem is that it's been a while since interest rates increased, or indeed have been at higher levels,  people don't think longer term. I remember them going up to 15%.
my mortgage is tiny now but I've been through some right old interest changes.

Wow 15%! 😳

Very temporarily but yes. Makes me a little more wary 😂