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How long to fix a mortgage rate?

(18 Posts)
CycleHire Tue 14-Mar-17 12:28:29

We are (hopefully) buying a house where we will (hopefully) live for a long time, maybe forever. We are both in our early 40s with two kids. In time we'd like to do an extension but that will cost over £100k we think so we won't be able to afford that for a good few years. Our mortgage will be about £350k which is a big loan but we do have quite a bit of equity in our current property so our LTV is good.

I just don't know what to do about fixing the mortgage rate. There's so much uncertainty about the next few years (Brexit etc etc) I'm thinking maybe we should go for 5 years. But of course the monthly cost is a bit higher. Obviously I need to speak to my partner and come to a joint decision but I wondered what others in a similar position are doing?

Thank you.

Ehsamy Tue 14-Mar-17 12:31:31

Just fixed for 5 years as I'm really concerned about Brexit.

johnd2 Tue 14-Mar-17 13:18:42

Just had the same decision and went for the 2 years in the end. I was going to go for 10 years but the extra cost over 5 years was huge, then that over 2 years was also quite big. Decided we'd need a few rate rises to make it cost more overall, but it depends how tight your finances are. The bank will charge extra every month as "insurance" for the people who have tighter finances.

AnneElliott Tue 14-Mar-17 13:20:43

I've fixed for 5 years to lock in the low rates over the medium term. Don't want to keep re mortgaging as we're in our forever home.

Monkeybunkey Tue 14-Mar-17 13:38:48

Just fixed for 5 years, having previously had 2-year fixes. Rate is slightly better than what I was on and if I'd fixed again for 2 years, we'd be mid-Brexit as the new rate ended so I went for 5. Plus it saves all the faff for another 5 years!

Scribblegirl Tue 14-Mar-17 13:41:59

We fixed for five last summer. I'm really relieved that we did - couple of our friends fixed for two at the same time and are coming up to halfway through their term. They're mostly hoping now that, while there might be economic uncertainty, they'll beat any major base rate hikes by spring next year. Afaik they're then thinking of going to five years next time around.

Nan0second Tue 14-Mar-17 13:44:23

We fixed for 5 years last September. We can overpay 10% of balance though, which was important to us.
Brexit meant we felt things were relatively unstable so we fixed for much longer than previously.

namechangedtoday15 Tue 14-Mar-17 14:20:11

Very similar situation OP, but where we are, property prices are continuing to rise and the value of the house, in comparison to the mortgage, means our LTV is coming down all the time. We are also on a fairly low interest rate, so the bulk of our payments are going towards repaying the capital. In 2 years, we'll have paid quite a chunk off the mortgage and the house will be worth more, so we'll probably fall into a lower LTV bracket (and therefore get a preferential rate) than a 5 year fix.

Also, the other thing to bear in mind is the extension. If you save / have a windfall / win the lottery and can do the extension in the next couple of years, then your house will be worth much more and again your LTV will drop quite substantially (and you'd get a better rate).

And if you don't save / win the lottery / have a windfall but still want to go ahead with the extension in the next couple of years, you might be able to remortgage to release the equity should prices go up.

But quite alot of that is based on prices rising in your area and not being too risk averse. Everyone is different.

tovelitime Tue 14-Mar-17 14:40:04

we've gone for 5 years on really low rate. We're doing work to the house and although our mortgage is huge the LTV is low and will decrease further and house prices are still rising. We're using it as an investment and will work on the house to take it to the ceiling for our road and then we'll continue to build up equity which we'll release in about 15 years when we're ready to downsize.

Factorysettings Tue 14-Mar-17 14:46:23

We went for 2 years here, I want to start paying off the mortgage quickly and not be limited to a 10% maximum for too long.

JoJoSM2 Tue 14-Mar-17 14:51:22

We're going to fix for 5 years this spring. It will cost 0.65% more every year. However, we figured that we'll only pay for 1 set of set up fees for the whole period + rates could go up in the next 3 years making our mortgage good value anyway. We are also worried about Brexit and the impact on our jobs/ ability to remortgage when it happens so the fear plays a considerable part in the decision.

dilapidated Tue 14-Mar-17 14:52:51

I went 2 years when I took ours out in Jan just gone.

MyHairNeedsASnip Tue 14-Mar-17 14:53:29

Just gone for a 2 year tracker with no get out fee, so any snifter of rises I can switch and fix.

Catsick36 Tue 14-Mar-17 14:58:29

We went for 5 years because the monthly payments were lower, and instead of paying £1000 admin or whatever fee every two years we're paying after 5.

Emily7708 Tue 14-Mar-17 15:17:49

We remortgaged last week at 1.79% for 5 years. Remortgaging is so expensive with all the fees and valuation and such a hassle I couldn't face doing it every couple of years. Plus there are some extremely low 5 year fixes at the moment.

CycleHire Tue 14-Mar-17 20:25:41

Thanks all. We are having a big chat this evening. I am leaning towards 5 yrs and him to 2 or 3 yrs. Not sure how we'll actually decide. Arm wrestle possibly ...

CycleHire Wed 15-Mar-17 07:05:47

We've decided on 3 years offset. Who knows if that's the right decision ...

JoJoSM2 Wed 15-Mar-17 09:47:58

You can never know for sure anyway. Only time will tell.

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