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WWYD Fixed rate mortgage - 2yr or 5yr?

(8 Posts)
Zola1980 Fri 19-Feb-16 19:04:50

We can secure 5 years rate at 2.49%
2 year rate at 1.74%
Difference in payment is only £80 a month.

Crystal ball time - would you lock in or risk the 2 year and rates not going up much in that time?

BikeRunSki Fri 19-Feb-16 19:10:32

2.

I've had 2 year deals for 16 years and always got a favourable deal when the previous one ran out. My IFA (who I know and trust) never recommends 5 yr deals. If you look at the overall interest you pay, the base rate would have to go up massively for the last three years to be beneficial to you.

Go for 2 years now, change in 2 years time.

gingerdad Fri 19-Feb-16 20:09:18

Just done a 2yr fix. But looking at total remortgage in 3-4 years.

Iamnotloobrushphobic Sat 20-Feb-16 10:27:27

I'm risk averse so I always go for 5 years. I would rather pay a bit extra for peace of mind. I would only go for the two years if it is likely that I will want to move home before the five years is up.
People might say that interest rates would have to rise massively to benefit from having a five year fix but I bet there were loads of people in the 1980's who regretted not fixing for a longer period when they ended up paying 17.5% interest on their mortgages.

thisisbloodyridiculous Wed 24-Feb-16 17:37:58

What's the standard variable rate?

AnneElliott Wed 24-Feb-16 22:45:41

Are there any fees? That might make the difference between which one is better value.

Iamnotloobrushphobic Thu 25-Feb-16 07:22:12

And not forgetting that if you take a 2 year deal and want another deal in 2 years time you will have to pay a 2nd set of arrangement fees.

SerenityReynolds Thu 25-Feb-16 14:04:52

I think it depends on your circumstances. We were in the same boat as you 18 months ago. We went with the 5 year as we had just started trying for another baby, and wanted to know exactly what our payments would be while I was on mat leave and then having 2 in childcare for a bit. If you're otherwise comfortably off month to month and could afford a rates increase, I might be tempted to take the 2 year one however.

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