Deeply regret not getting 5 year fix

7sefton

Hi everyone

Not sure there’s anything practical I can do about this, but just wanted to pour out my worries 

My partner and I recently bought a house with a large mortgage (£150k joint income, £720k 34-year mortgage, 72% LTV). We decided to fix at two years for 2.69%, as frankly we were scared of the ERCs in case we changed our mind, needed to move, or split up (not on the cards but we’re both pragmatists!!). We turned down a 5 year fix at 2.79%. This was in May, when the economic situation wasn’t so bonkers (but hindsight is a wonderful thing). 

We’ve not stretched our affordability to the absolute max, but I’m looking at the impact on our monthly payments if our rate increases by 3% in two years… looking at over £1000 extra a month. We could afford this, but it would be a bit uncomfortable. 

I’m just absolute kicking myself we didn’t go for 5 years, and feeing very anxious about the bad decision.

Any sympathy (or advice) welcome!! xx

darkcloudi

I did something similar where I could have paid the ERC and redeemed a rate of 2.34% for my primary mortgage as had 1.5 years left (now 1 year left) on it and chose not to when I redeemed my help to buy (took a further advance) for 10 year fix at 2.09 (redeemed my HTB 1.5 years early even though it was 0% interest on it). 

Just like yourself if I knew the future would have chosen to longer fix it.

My plan is to overpay mortgage 1 and bring it down enough next year and hope payments are reasonable with higher interest rate taken into account, since you suggest you can afford paying extra £1000, why not take advantage of the lower rate and make some damage to the mortgage now by making overpayments if not £1000 maybe £500 or whatever is reasonable (and within bounds of not getting a penalty charge from your provider), worst case you can do is to take a longer term to pay the mortgage off (when you come to renew).

FashionHeart

7sefton said:

Hi everyone

Not sure there’s anything practical I can do about this, but just wanted to pour out my worries 

My partner and I recently bought a house with a large mortgage (£150k joint income, £720k 34-year mortgage, 72% LTV). We decided to fix at two years for 2.69%, as frankly we were scared of the ERCs in case we changed our mind, needed to move, or split up (not on the cards but we’re both pragmatists!!). We turned down a 5 year fix at 2.79%. This was in May, when the economic situation wasn’t so bonkers (but hindsight is a wonderful thing). 

We’ve not stretched our affordability to the absolute max, but I’m looking at the impact on our monthly payments if our rate increases by 3% in two years… looking at over £1000 extra a month. We could afford this, but it would be a bit uncomfortable. 

I’m just absolute kicking myself we didn’t go for 5 years, and feeing very anxious about the bad decision.

Any sympathy (or advice) welcome!! xx

I was in the same position last year and am too currently on 2 years fixed for 2.75%.
Ours was the same situation too, we went for 2 years fixed in the likely case of moving (my commute to work is difficult) and generally want to start afresh elsewhere as we've been in this house for 14 years!
However, it is really hard to figure out what the future holds these days and so no one has a crystal ball...now with interest rates continually increasing, it's a deep regret for me too.

housebuyer143

7sefton said:

Hi everyone

Not sure there’s anything practical I can do about this, but just wanted to pour out my worries 

My partner and I recently bought a house with a large mortgage (£150k joint income, £720k 34-year mortgage, 72% LTV). We decided to fix at two years for 2.69%, as frankly we were scared of the ERCs in case we changed our mind, needed to move, or split up (not on the cards but we’re both pragmatists!!). We turned down a 5 year fix at 2.79%. This was in May, when the economic situation wasn’t so bonkers (but hindsight is a wonderful thing). 

We’ve not stretched our affordability to the absolute max, but I’m looking at the impact on our monthly payments if our rate increases by 3% in two years… looking at over £1000 extra a month. We could afford this, but it would be a bit uncomfortable. 

I’m just absolute kicking myself we didn’t go for 5 years, and feeing very anxious about the bad decision.

Any sympathy (or advice) welcome!! xx

Don't live life with regrets. It's wasted energy as it can't be changed. In two years the rates might be down to that level again.

london21

It happens like this sometimes.

Hard to time everything perfectly.

Imagine those that fixed for a long time in the past and rates went to all time low.

In the short-term rates will be high but no one know the next 3-5 years for certain. 

dimbo61

If you can and have no other expensive debt then overpay every month.
Could you aim for 60%LTV in 2 years ?
If you could manage £1,000 extra a month why not overpay NOW every month.

CountingPenniesClaire

dimbo61 said:

If you can and have no other expensive debt then overpay every month.
Could you aim for 60%LTV in 2 years ?
If you could manage £1,000 extra a month why not overpay NOW every month.

Very good advice here. Even saving that money ready to pay down when the fixed period ends will give you options. Will also give you peace of mind that you are taking some steps. 

secla

I’d agree with the above the more you can overpay now the lower the impact of higher interest rates will have. No one can predict the future you make your decision and roll the dice.

EnterUserName

If it makes you feel better, before brexit was a thing, interest rates looked like they were going to go up. So we decided to fix for 5 years for stability. We then had brexit and covid and really didn't need the fix. The fix is now set to run out next year... Just when we need it.

You can only make an educated guess at the time, based on the info you had. Otherwise we'd all be millionaires!

Good luck

RelievedSheff

We were offered a 10 year fix at 0.1% over what our current 5 year fix is.

Should have taken it. We didn't. Wont beat ourselves up about if though.

ACG

I tied into a 5 year fixed rate in March/April time and paid the ERC as I could see rates rising.

Nothing you can do, you can pay the ERCs and tie into something now, but I would probably hold on, it is what is, you made a gamble it does not look like it will pay off, but you never know, it may do. Just be thankful you do not need to worry for 18 months. 

See where you are at in 12 months time. You may receive a pay rise or 2 in that time.