Trying to decide whether to fix for a shorter or longer period?

richardc1983

Back in January our main mortgage deal ended so we fixed for 7 years at a reasonable interest rate of 1.74%. We also have another smaller mortgage with the same bank (under the same account) we used for doing the house up where the deal has now ended and we have gone onto the follow-on rate at 5%.

For us to fix this to a new deal we can go onto a 2, 3, 5 or 7 year fix at 3.54% interest rate and this has no product fees associated with it. If we want to go for a slightly lower interest rate we can go onto a 2 year at 3.39% interest rate or 5 years at 3.44% interest rate but these both have a product fee of £999 which makes the monthly payments more expensive.

I am thinking to fix for 7 years at 3.54% as rates are not going to come down?

Any advice please?

RelievedSheff

No one knows what rates will do in the next 2, 3, 5, 7 or 10 years.

Personally I would take the longer 7 year fix. It isn't much more expensive and it gives you longer term security that your repayments will stay the same.

We are kicking ourselves that we only took a 5 year fix last year when we were offered 10 for the same rate!

richardc1983

RelievedSheff said:

No one knows what rates will do in the next 2, 3, 5, 7 or 10 years.

Personally I would take the longer 7 year fix. It isn't much more expensive and it gives you longer term security that your repayments will stay the same.

We are kicking ourselves that we only took a 5 year fix last year when we were offered 10 for the same rate!

I am not sure how long you get before your dealing ending to be able to pick a new deal as I forgot about it and only know from the letter from the bank telling us the new rate and that the deal has ended! So much for caring about customers they should have told us sooner. 

london21

For certainty longer term is better e.g. 5 years.

No one knows for sure how long the rates will keep increasing, but 3 more increases expected in 2022. 

ariarnia

i think i'd prefer the 7 year fix or a 5 year plus 1 whichever means both parts of your mortgage are coming due at about the same time. if you take the 2 or 5 year fix on one part then when it comes due you wont have a choice other than your existing lender. if you can get both parts ending within a few months of each other then you can forget about it for a while. your monthly payments will be guaranteed and when the term ends you can consider the whole market for the best deal. 

richardc1983

ariarnia said:

i think i'd prefer the 7 year fix or a 5 year plus 1 whichever means both parts of your mortgage are coming due at about the same time. if you take the 2 or 5 year fix on one part then when it comes due you wont have a choice other than your existing lender. if you can get both parts ending within a few months of each other then you can forget about it for a while. your monthly payments will be guaranteed and when the term ends you can consider the whole market for the best deal. 

Thank you, I have fixed for 7 years for both parts now but when the larger one ends I will just wait a few months before the smaller one (I have just fixed now) ends so I can combine them into one product.