Fixed term length

Moneygrabber89

I have potentially a controversial question regarding length of fixed term.

 

Most people I speak to state the longer the fix the better the deal. For example, if you could get a 5-year fix for £600 a month but a 2 year fix for £575. Could I ask why paying more for longer is better? Is this just because the security side of things and peace of mind?

 

My reasoning towards potentially favouring a shorter term is after the 2 years there will be more equity within the home so might get a better LTV. This is even more true when considering that house prices keep going up.

 

Are people worried house prices will drop? Are people worried interest rates will be higher in 2 years’ time.

 

I am just trying to geta little feel of what you guys’ feel is best. I am stuck between securing long or short term. I understand convenience is a big aspect too.

flashg67

Of course it's never certain, but in a time of rising rates (like now) then many see security in a fixed rate & payment. Of course the opposite can work - I've 'lost out' in the past when rates dropped and I had a higher fixed rate.
This time, I'm due off a 2 yr fixed rate in 7 months and looking at quite a jump in rates, so wish I'd fixed for longer this time!
At the moment, I'd fix for longer as rates are likely to keep rising over the short/medium term. This isn't on the basis of any expertise, just IMHO
In your case, maybe look at what the difference in rates are between your current and expected LTV in 2 years and play around with the 'total payable' figures in a mortgage calculator

Moneygrabber89

To be honest mate I’ve just checked and only about 30 quid a month difference