Remortgage: 2yr, 3yr or 5yr?

michaelsft

I have a £200k mortgage on a house recently valued at £320k and my 2.19% fix is coming to an end. I’m very lucky in that I can make the new rates work without having to sell up as I have no wish to move.

The only question that remains is whether to go with a 2yr, 3yr or 5yr fix. It feels like an impossible question and I’m wondering if anyone has any advice or insight.

2yr and see if rates come down feels risky, 5yr and I could be paying out a lot more than I need to if they do go down.

My payment now is about £800, with either deal it’s about £1,100 a month. It’s a real kick in the teeth of course but I just want to make the right decision and I feel like I can’t win.

Newbie_John

There's no right answer. You still have probably 20 years on your mortgage - if you keep going with 2 fixed, then you'll have the dilemma 10 times, if you keep choking 5, then the issue will only be 4 times.. rates may go up, may go down. And the rates are adjusted - 5 years is cheaper than 2 years.

Whatever you choose - you'll know if it was a good choice when it ends.

Hoenir

The only way to guarantee to win is to overpay your mortgage and reduce the amount of interest you incur over the term of the mortgage. Any other decision is a coin toss. 

Martico

Remember, of course, to factor the mortgage arrangement fee into your calculations

london21

I am going for 2 years fixed with no product fee and it's 5.15% 65% LTV. 

When rates go down a bit will fix for 5 years. 

michaelsft

london21 said:

I am going for 2 years fixed with no product fee and it's 5.15% 65% LTV. 

When rates go down a bit will fix for 5 years. 

That’s my thinking as well, I guess I’m just worried something awful will happen again and they will go up more. What a rubbish system! Fingers crossed.

sevenhills

london21 said:

I am going for 2 years fixed with no product fee and it's 5.15% 65% LTV. 

When rates go down a bit will fix for 5 years. 

It has become increasingly evident that rates will be 'higher for longer' as economic resiliency persists, or they could go up, no one knows.

I got a 10-year fix when rates were low, but only fo that if you are sure to be staying in the same house.

london21

sevenhills said:

london21 said:

I am going for 2 years fixed with no product fee and it's 5.15% 65% LTV. 

When rates go down a bit will fix for 5 years. 

It has become increasingly evident that rates will be 'higher for longer' as economic resiliency persists, or they could go up, no one knows.

I got a 10-year fix when rates were low, but only fo that if you are sure to be staying in the same house.

True, the max i will do is 5 years personally 

Just never know changes can be u expected.

When i got the 2 years fix in 2021 wished i went for 5 years but didn't expect rates to rise so quickly tbh. 

It has been dropping a bit as i started looking at the remortgage rates around October.  I have until January to select final rate as current ends 01/02/2024 

london21

michaelsft said:

london21 said:

I am going for 2 years fixed with no product fee and it's 5.15% 65% LTV. 

When rates go down a bit will fix for 5 years. 

That’s my thinking as well, I guess I’m just worried something awful will happen again and they will go up more. What a rubbish system! Fingers crossed.

Fair enough depends on risk threshold and need for certainty.

Currently max i will do is 3 years but personally comfortable for 2 years Fix as my current rate ends 02/2024 so new 2 years Fix will run until 2026 and will re-assess. With product fees a bit lower rate but without product fee works out cheaper for me. 

idcool

I have a very similar situation to yourself. I am no mortgage expert, but I am going with 2 year fix and hope they go down, but you never know. What swings me ever more towards 2 years is that I have kids that will be out of nursery in the next year so will have more money to shorten my term or overpay when the fix ends.

Hoenir

idcool said:

I have a very similar situation to yourself. I am no mortgage expert, but I am going with 2 year fix and hope they go down, but you never know. What swings me ever more towards 2 years is that I have kids that will be out of nursery in the next year so will have more money to shorten my term or overpay when the fix ends.

You can still overpay while in a fixed rate product.