5yr or 10yr fixed

aj9648

Yes asking for looking into a crystal ball

I need to remortgage by the start of Dec 2025.  Currently on a 1.34% fixed with Atom.....good old days

Value of house £550k with 100k left to pay and want to pay this off in the next 10 years.

Whats most pragmatic thing to do - 5yr or 10yr fixed - any advice?

StephenMortgages

Broker here - while not giving advice, I would suggest first and foremost looking at your plans.

Is there anything in your personal life that would make you want to review the mortgage within the next 10 years? Children going university, move home, change jobs, retirement, having children, debts finishing etc. If so then it could be worthwhile aligning the mortgage up to these times to give you more flexibility. 

If not and you have no plans to move and happy with the risk that you could be paying more if rates drop, then fix for the longer period. 

ACG

With everything going on in the world t the moment, a lot could change in the next 6 days let alone 6 months. 

What Stephen mentions always has been and continue to play an important factor but I think also a lot will depend on the options available at the time. 

Another factor though is that there are not as many 10 year fixes on the market, which means there is typically a premium charged on those products. 

RelievedSheff

I think in your situation I would still opt for the 5 year fix.

Although having said that we are kicking ourselves that we didn't take the 10 year fix that was on offer the last time we remortgage 4 years ago!

We have a little while to go yet our remortgage isn't due until next May but we will be taking a 5 year fix at whatever the rates are purely because that will be our remaining term.

ACG

RelievedSheff said:

I think in your situation I would still opt for the 5 year fix.

Although having said that we are kicking ourselves that we didn't take the 10 year fix that was on offer the last time we remortgage 4 years ago!

We have a little while to go yet our remortgage isn't due until next May but we will be taking a 5 year fix at whatever the rates are purely because that will be our remaining term.

I dont do many 10 year fixes. The last one I did was in 2014 @ 3.99%. 
Imagine missing out on all the 1-2% fixed rates in that time and then coming out of your deal when rates are only marginally below the highest they have been in the last 10 years on the back of the mini budget/war in Ukraine. 

Fishyfish111

Im in a similar situation but probably 5 years ahead. 50k to go. Fixed shorter term 2 years as after 2 years interest is pretty low anyway so won't make much difference. I personally would go 5 years and pay off 10k a year equity. 

Altior

I did a 7 year fix in 2021 (in reality almost 8). Slightly unusual scenario as I was switching from a tracker to 5 yr fix with Santander, and the agent asked me if I'd be interested in 7 for a few ticks higher rate (not a publicly advertised deal). I metaphorically snatched his arm off!

The future then was quite predictable, the only way was up realistically. But as always, it's down to the rate. I would take a great 10 year rate now as revisiting 1.X rates within the generation seems quite an unlikely prospect. 

 

eschaton

If you’re not intending repaying early then 10yr fix it the rate is good. If not then probably 5 year fix. 

But you need to look at flexibility pro’s and con’s. 

In February 2022, I had 8.5 years remaining on my BR +0.99% tracker. I’ve never done fixes ever and it has been the right choice. I’d never considered over payments due to low interest rates for years. 

I tried to remortgage with Barclays at 2.14% fix for 7 years, reducing the term by 18 months. Despite only 21% LTV it was a straight knock back, twice. 

I did have £37k over 7 CC’s but with the LTV and security on the house, there was no risk. 

I started paying off the cards as offers expired but by that time, rates had rocketed and there was no point remortgaging. 

If I had got it, I would have had ERC’s for 5 years and no incentive to pay it off early with low rates. 

Last April I received £4000 unexpectedly and decided to make my first ever mortgage over payment. Buoyed by taking 9 months off the term, I paid another £4000 from savings the next day. 

The next month I decided not to buy a car I seen and wanted to buy. A first for me. As I buy upfront it would have cost me £10k to change. So I paid another £8k off. Then in July it was another £9300 with the aim to pay it off within 2 years. By October, I’d paid it off, just under £40k in the year. 

Apart from a home upgrade fund I was down to my last £300. 

At current rates I’d probably be paying £570pm until August 2030. Instead I’m saving that extra every month and building my savings back up to eventually get a newer car in 2 years time.  My last car finance was in February 1998 and despite not having a mortgage, I’m not going to start again. 

I’ve saved on car depreciation and interest charges. I’d also have had to pay 20% tax on the interest I would have earned. By reevaluating my priorities in life, I’ve got rid of my only debt and saved £000’s. 

It’s worth looking at opportunities to overpay if you’re able to.