Deeply regret not getting 5 year fix

Cheesy77

Not much else to add by words of advice, but it's sometimes comforting to know you're not alone. There will he many many tens of thousands of homeowners across the UK facing similar worries right now. 

Let's hope it's a short term increase in rates until inflation is back under control. 2023 looks like it'll be tough but who knows what 2024 will bring, there's a general election for a start! 

FlacosFloozie

We fixed in January for 2 years at 1.04% as there was a reasonable chance we would be moving then. Its now looking less likely we'll move but the cheap fix means we can overpay and bring the future costs down. 

Chambo1901

I was stuck between a rock and hard place 2yr or 5yr , me and the not so good lady have split and deal ended this month. I Want to sell and port into my name and downsize more than likely next year. That's all well and good if I can port and pass affordability then I would have no ERC , but if not then I would have been in for the ERC and with a 5 year = 5%.

I'm all set for 6% when this deal ends in 2024 and then extending years to bring cost down, Change and evolve to keep your home Britain 2022 hay.

fewcloudy

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

No sympathy, and advice has already been given. I wouldn't be anxious if I were in your place, you're not even 6 months into an 2 year fix.

You can afford £1000 a month more than you pay now, and you're worrying...jeez.  Enjoy the house and everything else that goes with it and stop worrying. And it goes without saying that you should be overpaying by as much as possible now - you need to make hay whilst the sun shines.

Orchid96

Hi @7sefton, 
I can clearly understand what you are going through.
With such a high mortgage, each 1% rate change will result in additional interest of more than 7K per year i.e almost £580 increase in monthly payment. 
Paying £1000 extra every month for the remaining term of current fix will only bring down the principal amount by another 18K (not a significant reduction when the mortgage is £720K).
If I were you, I will be talking to the mortgage advisor to secure either a 5year/10year product, to which you can switch after May2023 (by paying 1% ERC). It will just have another hard search on your credit file, but won't cost you anything.

My situation is almost similar to yours except that the mortgage is for £530K (https://forums.moneysavingexpert.com/discussion/6379178/should-i-pay-erc-of-10500/p1).
I am still thinking of paying 2% ERC (almost £10.5K), and seeing all the recent announcements by new government getting more worried about the economic recovery. 

GAMBITv5

Have promptly changed my 2yr FR application with Nationwide (4.49%) to their 5yr FR (3.99%) before they inevitably raise these later in the week...

saucer

GAMBITv5 said:

Have promptly changed my 2yr FR application with Nationwide (4.49%) to their 5yr FR (3.99%) before they inevitably raise these later in the week...

That's a no brainer!

GAMBITv5

saucer said:

GAMBITv5 said:

Have promptly changed my 2yr FR application with Nationwide (4.49%) to their 5yr FR (3.99%) before they inevitably raise these later in the week...

That's a no brainer!

And naturally, my offer has come in before the broker was able to change the rate. Reissue required