Fixed Rate - 2 Or 5 Year Deal

salsa1

I am looking to renew my expiring fixed rate deal and looking for the best deals around.

I now wish that I had taken my previous deal over 5 years not 2.

Do you think it would be better to take the next fixed rate out for 5 or 2 years.

Any help would be appreciated.

Ember999

salsa1 wrote:

I am looking to renew my expiring fixed rate deal and looking for the best deals around.

I now wish that I had taken my previous deal over 5 years not 2.

Do you think it would be better to take the next fixed rate out for 5 or 2 years.

Any help would be appreciated.

Well, I've just taken on a 3 year deal, I was offered 2 year or 3 year. If I had been given the option of a 5 year fixed rate deal, I probably would have taken it. The housing market is a bit up and down at the moment, sales on the high street are slumping, millions of people are riddled with debt, interest rates are predicted to go down shortly one minute, up the next. With a 5 year fixed rate deal, in my opinion, at least you know where you are with your mortage payments and if the worst happens, there is a major crash (as happened in the 80's) and mortgage interest shoots sky high (which it very well may do!) you are not at risk for 5 years.
But it is all personal choice...good luck with your decison.
Ember

meanmachine_2

If property crashes int rates tend to go down, not up, in a last ditch effort to halt the slide.

But who knows? I think we're seeing the last of the low inflation years, so I'd defo fix for 5 years, maybe 10 if you can get it.

Jacster_2

Depends on how much certainty you are looking for.

In my situation, I'd prob fix for a shorter period as I've proved to be a restless soul over the past few years, and who knows, may move again......:eek:

If you're not planning any major changes, I'd be tempted to fix for longer....

HTH

angelus

Interest rates work in cycles, and we're starting the downward phase.

I would hold off till nearer the end of the year, or get a discount/tracker now.

I fixed my mortgage at 3.59% nearly 2 years ago, it runs out in November when i expect some great deals will be on offer.

I believe we are in for low interest rates for the long term now that the BOE has control of them.

pitbull

angelus wrote:

Interest rates work in cycles, and we're starting the downward phase.

I would hold off till nearer the end of the year, or get a discount/tracker now.

I fixed my mortgage at 3.59% nearly 2 years ago, it runs out in November when i expect some great deals will be on offer.

I believe we are in for low interest rates for the long term now that the BOE has control of them.

I am like you, fixed at 3.59% 2 years ago, looking to renew in October.

The current deals are not very attractive in comparrison so I hope you are right and better deals become available leter in the year.

I would be looking to fix for the longest term I can if the interest rates are favourable, otherwise I would look at a capped deal which ensures that my interest rate cannot rise above a certain level.

MortgageGenie

pitbull wrote:

I would be looking to fix for the longest term I can if the interest rates are favourable, otherwise I would look at a capped deal which ensures that my interest rate cannot rise above a certain level.

As a concept capped rate mortgages are wonderful and everybody likes the sound of them however in practice, from a personal point on view, I've found most deals to be a sale gimmick as they don't usually offer good value. (especially at current interest rate levels)

They're usually priced 0.5%+ higher than the equivalent fixed rate and usually linked to the lenders SVR (or an obscure version) which means the payrate is unlikely to go down unless BOE drops dramatically. They would be much more popular if they were say 0.5% higher than the equivalent fixed rate but tracked the BOE+ say 0.5% ish.

pitbull

Thanks MortgageGenie, that is useful advice, I admit I am often lost in the financial minefield but your advice narrows down the options when I search for a new deal.

legalmind_3

The answer, as always, depends on your circumstances, the most important of which is the size of your mortgage. This affects everything, for example any fees you pay are a bigger or smaller % of your repayments (fixing twice over 5 years rather than once) and smaller interest rate changes in the future will have a bigger effect on monthly repayments (in a good or bad way).

My view is that with swap rates suggesting falls in the base rate in the not too distant future, it was always going to be a shorter 2 year deal that appealed.

Innys

I have checked out the Nationwide site as my 2 year fixed is due to expire at the end of September. I chose Nationwide because I have heard they offered good deals and most of the fees were included.

The difference between a 2 year fixed and a 2 year tracker, on my mortgage of £88k over 13 years, was just £15 per month - the fixed being cheaper. I think I'll be taking a gamble that rates come down - they are bound to at some point in the next two years - and go for the tracker. If they stay as they are, and I still go for the tracker, it'll end up costing me an extra £300 odd over two years, which is a risk I'm prepared to take.

salsa1

Thanks for all the replies.

My fixed rate expires at the end of September - oh how I now wish I had taken it out for a longer term.

If we all knew what was going to happen we would all be millionaires.

I think I'm going to wait and see what happens over the next few weeks.