Renewing Fixed deal: two, three, or five years?

Mive

Hello everyone,

This might be a silly question (I see similar questions been asked over the last few months), but I still want to get your advice - just to decide myself and stop getting worried about it.

My fixed deal is coming to an end at the end of December, and I need to think about my options:

Value: 177k; outstanding 56K, 10 years and four months

I am currently with Nationwide, and I don't see a huge advantage in moving to a different provider (I have checked some comparisons websites). I have been pretty aggressive in terms of overpayments, and over the last 8 years I cut my time by 3 years and four months. I plan to repay this mortgage in approximately 7-8 years.

Currently my options are a two-year deal at 4.54% (568.84) or three-year deal at 4.48% (567.17). The two-year tracker is not so convenient at the moment (i.e., currently at 5.89%, and I would need to hope for substantial rate cuts for this to have an advantage over the fixed deal). I am comfortable with these payments - more than what I had to pay in the past or right now, but still very low in the big scheme of things.

As there is no real difference in what I would pay between the two-year and the three-year deal, what shall I do? Go for a two-year fixed hoping that rates will be better in a couple of years time, or just forget everything and get a three-year fixed (but I would be disappointed if rates fall between year 2 and 3!)?

Thanks for your advice! 

 

Mive

I should have added that I am aware that I could select an option now and then ring Nationwide prior to January if I change my mind in relation to the deal I select. I am still undecided between two and three years!

Newbie_John

If you're getting worried now - then I would suggest longest possible term - 5 years? 
It will save you additional worries by providing stability of knowing what will you be paying in 2029.

Also there's really just £50k left, any changes to rates will have very tiny impact on your payments.  

Mive

Newbie_John said:

If you're getting worried now - then I would suggest longest possible term - 5 years? 
It will save you additional worries by providing stability of knowing what will you be paying in 2029.

Also there's really just £50k left, any changes to rates will have very tiny impact on your payments.  

Thanks! Probably five years is not the right choice for me - if interest rates go down significantly I would just be upset for a long time. As you say, with 50k left, changes to rates have a marginal impact on my payments (approximately £28 per month per each percentage point right now). I am just curious to see what other forum users would select.

Newbie_John

Will you be upset if you took 2 years and rates went up above the current ones?

For example rates in 2020 were close to 1% and in 2022 above 5%.. a lot can happen in 2 years 😉