FD question

Nudgemod

i am going to switch over to a fd offset mortgage there are two options that i can take
2 year fixed rate offset Mortgage

5.25% for 2 years, reverting to our standard variable rate for the remaining term, currently 6.25%.
The overall cost for comparison is 6.2% APR.
(no arrangement fee / fixed offset Mortgage booking fee of £99)
5 year fixed rate offset Mortgage

5.29% for 5 years, reverting to our standard variable rate for the remaining term, currently 6.25%.
The overall cost for comparison is 6.1% APR.
(arrangement fee £299 / fixed offset Mortgage booking fee of £299)

i have a bank account with Natwest which my wages are paid into and i want a DD set up to transfer my mortgage payment into my FD account, and i am going to transfer 5k into the first direct account.

which deal would be the best for me as i have a young family and another due in a few weeks and need to save where i can

thanks

KiKi

Hi there.

It depends how long you want to be tied in for. At the end of the day, the overall comparison isn't very different, so how long do you want the fixed rate for? Also, you need to consider the penalties for early redemption if there are any.

Personally, if the early redemption penalties are no different, I'd take the 2 year as I wouldn't want to be tied in for any longer than that. No-one can tell you want interest rates will do in two years so your guess is as good as anyone's. Of course, if you want the comfort with a small family of knowing your mortgage payments for 5 years, that might suit you better.

Just be aware, as with any fixed mortgage. When the 2 years or 5 years is coming to an end, if interest rates have gone up significantly in the meantime, your payments will suddenly soar. Just be aware of that and keep an eye on rates and plan for it. Just as equally, you won't benefit from any fall in interest rates.

Sorry not to have an 'answer' as such, but I hope that information helps you a little.

KiKi

Nudgemod

yes, thanks for that kiki