2 or 5 year fixed?

Hebrews12

Our mortgage is up for renewal in a few weeks and we have 12 years left on our mortage.  Our current lender is offering us a pretty decent 5 year fixed deal and a slightly worse 2 year fixed but they're the best 2 deals around I can find.  I know no-one really knows what's going to happen in the world in the coming years but I'm guessing there will be people on here who might be able to give some advice on which is more preferable.  Thanks for reading.

No19v87

Hebrews12 said:

Our mortgage is up for renewal in a few weeks and we have 12 years left on our mortage.  Our current lender is offering us a pretty decent 5 year fixed deal and a slightly worse 2 year fixed but they're the best 2 deals around I can find.  I know no-one really knows what's going to happen in the world in the coming years but I'm guessing there will be people on here who might be able to give some advice on which is more preferable.  Thanks for reading.

Depends whether consistency is important to you. If you couldn’t really afford a price rise over the next 5 years, the 5 year deal is probably the one to take.

If you could afford the risk of a rise, then you can take the 2 year deal and see if prices drop during that period.

Add in whether you would be more annoyed if you take the 5 and rates drop during the deal, or you would be more annoyed to take the 2 and the prices rise.

Combine the above and you will have your answer.

Lots of people will predict different outcomes on rates over the coming years. It’s impossible to know for sure (who expected a Covid pandemic or the Truss tragedy?). My own personal prediction is rates will slowly reduce over the next 2-5 years but will not be anywhere near as low as they were before.

chanz4

see what happens in the next few days

dougson

Would also add with a 2yr fix you are probably looking at a fee for switching product, which might be quite large in relation to the balance outstanding. Will be a fee with the 5 year too of course, but would be paid fewer times

Newbie_John

12 = 5 + 5 + 2

So I would use the 2 when there's highest chance of you moving out of the property. If you feel comfortable paying 5 year rates, not planning to move out in 5 years - I would leave 2 year period for the end and possibly consider paying it off after 10 years.

[Deleted User]

I went for 2 years in February as I believe, in the short term, rates will drop.

Hoenir

Hebrews12 said:

  Our current lender is offering us a pretty decent 5 year fixed deal and a slightly worse 2 year fixed but they're the best 2 deals around I can find. 

What's the difference between the 2 products in terms of monthly outgoing?