2 year or 5 year fixed

cook0891
cook0891 Posts: 144 Forumite
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in Mortgages & endowments
I know there is no magic ball and totally my decision but just wondering what people think to options I have been offered from my broker.

2 year fixed @ 2.74% or
5 year fixed @ 3.69%

This is best for me as no fees etc

Thanks in advance!!!
«1

Comments

  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Interest rates would have to rise catastrophically for the 5 year fix to be the better deal. Seems unlikely in the face of impending Brexit where lower rates are a competitive edge helping exports and minimising exports.
  • kaych
    kaych Posts: 376 Forumite
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    Depends on how secure you want to be in the next 2-5 years.

    We had the same dilemma and decided to go for the 2 years in the end but will pay the mortgage at the 5 years interest rate.

    I just don’t believe the rate will increase by more than 1% in two years time. But that’s just what I think. of course anything can happen with Brexit etc.

    Good luck with your decision!
  • phillw
    phillw Posts: 5,594 Forumite
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    cook0891 wrote: »
    I know there is no magic ball and totally my decision but just wondering what people think to options I have been offered from my broker.

    2 year fixed @ 2.74% or
    5 year fixed @ 3.69%

    What is your LTV? Will your LTV be much better in 2 years? Because if you can put money by then you may be able to unlock better rates in 2 years time.

    What do you think the rates will do? The lender thinks it will go up.

    Are you comfortable taking a risk and seeing if it pays off?

    I always fixed for the cheapest and shortest rate when rates were on the way up, tracker on the way down.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    What LTV they look high

    Nationwide on 90% LTV do no fee 2.39% and 2.94% a much narrower gap
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    phillw wrote: »

    I always fixed for the cheapest and shortest rate when rates were on the way up, tracker on the way down.

    in the last 40years the only upward trend periods lasting at least 2 years have been

    Jan 1978(6.5%)-> July 1980(17%) (that had a 2% dip Feb-June 1979, peaked Nov 1979)

    May 1988(7.375) -> Oct 199014.875%) (that peaked at Oct 89 so trending was less than 2 year)

    June 1996(5.6875%) -> Oct 1998(7.25%) (not a big enough change to spot)

    Picking the bottom of a period of rise is ......
  • cook0891
    cook0891 Posts: 144 Forumite
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    Thanks for the replies.


    LTV would be based around 72%. Borrowing £102,000 property valued at £140,000.


    The broker said could get lower rates but would incur admin fees etc which wouldn't make it viable.


    My initial plan was to overpay by least £100 per month.


    I am currently paying £545 mortgage 3.89% (think) but have £20000 CC debts which all on 0% but paying around £600 a month on those. Adding these to mortgage (I know be paying interest now on these) but on 2 year plan would be £550 per month.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    75% LTV there are far better deals even with fees than

    2 year fixed @ 2.74% or
    5 year fixed @ 3.69%

    which lender?
    is there affordability issues.


    who is your current lender have you asked them for retention on your current mortgage?

    Is the £102k with the debt rolled in?
  • cook0891
    cook0891 Posts: 144 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    getmore4less wrote: »
    75% LTV there are far better deals even with fees than

    2 year fixed @ 2.74% or
    5 year fixed @ 3.69%

    which lender?
    is there affordability issues.


    who is your current lender have you asked them for retention on your current mortgage?

    Is the £102k with the debt rolled in?


    Halifax is proposed new lender.


    I do think affordability is an issue as asked first direct before and they said no.


    I have asked current provider and they can do £102k over 21 years to pass affordability test, waiting a call back next week to discuss rates.


    And yes, the £102k is debt. £80k mortgage and £22k CC (approx. figures)
  • lovehols
    lovehols Posts: 214 Forumite
    We went for a 5yr fix, wanted stability. 2.49 (90% loan to value) with Barclays. We have my current property to sell in the new year and will use a chunk of the proceeds of this for major renovation work and we can still make the overpayments each year too. I'm hoping by the end of the 5 years we can then reduce term significantly, and reassess things.

    I guess it all depends on what you want.
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    First Post First Anniversary
    What is your income?

    £20k on credit cards, even at 0%, is an absolute ridiculous idea. If you are being told you are at your limits of borrowing you must be under £30k?
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