Just about to buy our first home - £285k with a 25% deposit - and can't decide whether to fix for 2 years or 5 years.
2 year deal is 3.59% with monthly payments of £975
5 year deal is 4.29% with monthly payments of £1061
We can afford both and was budgeting to make overpayments to take us to £1100 total pm. We plan to stay in this house for 10ish years. We will be thinking about a second baby in the next year or so. My salary is slightly higher than DH's who is self-employed, but obviously will dip if/when I go on maternity leave again.
So I was thinking that although higher, we'd be better to fix for 5 years so we know what we're committing to for all of that time, and if interest rates go high or the market crashes we won't have a problem remortgaging (as well as the cost to do so) in 2 years time. But our overpayments will obviously be smaller and there's always the poss that we'll find ourselves locked in to a 4+% which will suck if interest rates go down.
Basically - I'm looking for someone to predict the future and tell me a) what interest rates will do and b) what my local housing market will do!
What would you do in our position?
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Fix mortgage for 2 or 5 years?
22 replies
nm123 · 22/10/2012 14:59
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