Fixed for 2 or 5?

HL1972

What are the benefits of choosing a five year fixed mortgage over a two year one? I called my bank this morning as our two year fixed is just about to expired and we were offered a five year fixed with no fee. I have no idea!

Also, can anyone recommend a bank with a low interest rate. My bank is offering 4.99%.

Thanks.

meanmachine_2

The advantage of a five year is that it is fixed for five years. It's that simple.

You pay slightly more in interest for increased certainty. You would choose to fix for longer if you're of the opinion that int rates might rise above where they are in the next five years.

4.99% for a five year fixed is fairly competitive.

personally I'd be fixing for 10 years if I was buying now, but that's because I take the view that inflation is starting to creep back into the market. But I could be wrong.

Ian_W

I agree the MM - If it wasn't for other factors I would certainly go fixed for min 5yrs.
4.99 is certainly a reasonably good rate but all the "headline rates" need to be set against the fees charged, ie: arrangement, valuation, legals etc. If 4.99 is completely fee free it's a v.good rate.
Get some quotes off the mortgage section of the site and also have a look at Nationwide who have some very good low [but not no] fee fixed's ATM.

HL1972

Sorry, I confused things. My bank is offering 4.99% at two years with a £300 fee and 5.19% at five years with no fee. Do you think that still sounds reasonable? I figure that there isn't much difference between the two?

meanmachine_2

OK, that's less competitive. I wouldn't lock in for five years at 5.19%.

Have a look at remortgating. If you're prepared to take the trouble, you could easily find a 2 yr fix for 4.3-ish.

MortgageGenie

The size of your loan is an important factor when remortgaging as it will dictate whether you should be looking for a low set-up fee deal or lower interest rate.

As mentioned by MM, subject to income/LTV/loan amount, you should be able to find more competitive deals.

MINMOUSE

I think Alliance & Leicester are doing 3 year fixed 4.29 arrangment fee 295.00 at the moment!

MortgageGenie

MINMOUSE wrote:

I think Alliance & Leicester are doing 3 year fixed 4.29 arrangment fee 295.00 at the moment!

I'm not aware of any such scheme at the moment unless it's an exclusive deal?

MINMOUSE

http://www.alliance-leicester.co.uk/mortgages/index.asp?page=fixed-rates&buyertype=remg&ct=remortgages
for 4.24 for 2 years or
http://www.alliance-leicester.co.uk/mortgages/index.asp?page=switcher-rates&buyertype=eremg&ct=home for 3 years this might be for existing customers only not sure

herbiesjp

I think those rates have just been withdrawn

MINMOUSE

Hope not cos I've just posted acceptance back for one of those rates!