5 year or 10 year fixed rate mortgage?

[RainbowsandSnowdrops]

Hi!

Our mortgage deal is coming to an end, and obviously this has worked out well for us with the base rate being so low.

Our current deal (5 year fixed originally) is 2.84%.

Do we take out a new 5 year for 1.89% which is obviously amazing or go for a 10 year at 2.59%.

The 5 year is around £50 cheaper than our current payment and 10 year would still be around £10 cheaper than we’re paying now.

We were going to move house but are staying put now, some long term stability would be great but so would saving on our monthly payment!

I actually work in the financial sector but not sure what to do here and would like some opinions or to see what everyone else is planning to do. I think I’m leaning more towards a 5 year!

I’m planning on 5 year as soon as I can apply for our remortgage

Hi,

From the rates you got and your monthly repayment I would be more inclined to go for the 5 year fixed rate.

Is your mortgage now at the base rate? I'm not sure I'd remortgage at all at this point. I'd be inclined to leave it for a few months to take advantage of crazy low rates, especially in light of current uncertainty. Then lock in a five year rate in a few months.

I remortgaged in January for 2 years and asked the big question (then!) re Brexit uncertainty. My broker said he'd go with 2 years and in fact would be doing so in February as that was when his was up.

So I'd go 5 years as well.

@BlingLoving nope It doesn’t work like that with the base rate it’s on a fixed deal ending in July then would just go to standard variable rate which is of course much higher, I can lock in a new deal 90 days before it’s due so just getting organised!

It’s a perfect time to fix it’s just a case of how long.

@ree348 yep that’s what I’m thinking it’s very tempting. I’ll probably try to put it in a savings account. All of this has made me realise we need more of a rainy day fund!

I'd be inclined to go for the five year fixed, and if you're in a position to, also overpay the £50 you are saving in order to reduce the term of your loan.

Go for the 5 year one if you’re not staying out indefinitely

In 5 years time you can reassess

Also - those dates still look quite high, what’s your LTV? Have you spoken to independent broker to make sure it’s the best deal for you?

Agree that those rates look high. I was reading about sub 1% in the weekend papers.

Do they not do lifetime trackers anymore? We've always had one of them and except for about 3 months out of the last 25 years that we've had a mortgage it's always been cheaper than fixing.

The economy is going to be very fucked for a very long time, so they won't put base rates up by much as it will just cause everything to collapse further.

I can’t go elsewhere as I have another fixed deal with them for some additional borrowing that I did. My LTV is around 68%. Looking at the market it does seem competitive.

My lender isn’t doing trackers anymore and I personally always go for fixed anyway.

@ACupOfCoffee thank you. Overpaying is definitely a good option and something I want to do but for now we really do need some savings. I would usually repay debts first but honestly I hate having to rely on credit for emergencies. Having our little girl definitely messed up our savings more than expected!

You can wrap up your extra borrowing into one new deal with a new lender

They can’t force you to stick with them for extra borrowing

You can wrap up your extra borrowing into one new deal with a new lender

Yep it’s just with the redemption charges and rate of that deal etc. it wouldn’t be worth it.

Surly they should have put your extra borrowing in line with the expiry of your current mortgage ?

Definitely 5 years......I got dumped 3 years into a 10 year fixed. I took over the house so had to remortgage and got heavily stung.......!!!

We are also coming to the end of our fixed term and are thinking that we will go for another 5 year fixed rate deal - but continue to make the same monthly payment to overpay.

Surly they should have put your extra borrowing in line with the expiry of your current mortgage ?

Yep it would have made sense it was just a decision we made as we wanted to fix that one for 5 years too, I’m happy to stay with our current lender for now for a few reasons and their rates are generally competitive.

Thanks for all your input.

I have a ten year one and wish I'd gone for the five year one and overpaid the difference in retrospect.

Check if you can overpay and what amount? Normally if they fix it, they need a set amount to pay the banks swap.

Anyone know how early you can remortgage? Mine is due November

If you revert to base rate it is probably a lot lower than that.

@AteAllTheAfterEights they suggest 3 months before

5 years. Otherwise you're giving the lender nearly 10k for nothing. Interest rates are f@#£&d for a very long time; certainly we'll see nothing like the early 00s unless there's a completely novel tech boom. Mind you, if they get electric cars up to a 400 mile driving range...

Switching mortgage lenders isn’t that easy atm as valuers aren’t working