2 years at 6.1% or 5 years at 5.1%?

Owe 97k on the mortgage. Fixed rate at 2.1% ends in March.

Have 60k in Isa (vanguard all world index tracker). Decided to take that out and put it into the mortgage when renewal kicks in so 37k left to pay.

Was going to go for a 2 year fixed at 6.1% with current lender (NatWest) and secured into this recently as worst case scenario. 

I wasn't planning to switch the ISA money into mortgage. Was planning to put it towards extension and increase borrowing. Builders quotes are just too much so decided to make do with our small house and try to clear the mortgage. 

However now the plan is to clear mortgage in 5 years. I could get 5 year mortgage for 5.1% I think.

Would you go for this over the 2 year 6.1%? Obviously the 2 year was with the anticipation I could get a lower rate soon after based on inflation coming down in the next year or two. It is actually less than 2 years, more like 1 year and 9 months based on the dates.


  • If you're planning to pay it off in 5 years - I would go for 5.1% fixed for 5 years.
    No more remortgages, product transfers, uncertanity.. you know what you will pay till the end.
    6.1% is £717 a month (over 5 years) vs £700 on 5.1% - not a big difference - that can be easily erased if you do small overpayments.
  • Look very carefully at the arrangement fee on that. I think both of those rates with Natwest will have fees on them? But on 37k, you should find it cheaper to go for a fee free product at a slightly higher rate. Especially on a 2yr fix.
  • 6.1 is no fee. Will check the ither
  • 6.1 is no fee. Will check the ither
    I think the best Natwest 5yr rates are 5.1% with £1500 fee or 5.4% with no fee. If you're paying it off in full over next 5 years the 0.3% difference is less than £300 difference in interest.
  • london21
    london21 Posts: 2,089
    First Anniversary First Post Name Dropper
    What is your LTV?

    I have secured a rate of 5.59% with Virgin money 2 years fixed no product fee. With a £995 product fee would have been 5.35%. 
  • RelievedSheff
    RelievedSheff Posts: 11,126
    First Post First Anniversary Name Dropper Photogenic
    If you are planning to have the mortgage paid off in the 5 years I would opt for the 5 year fix.
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