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Original poster

Shall I fix my mortgage for 5 years or it is worth the risk

72 replies

Thinkingswillbebetter · 19/10/2022 20:54

Hi everyone,
NC as it is about personal finance. I am seeking a second opinion and will take full responsibility on my own decision.

I recently got a deal to fix my mortgage at the rate of 4.37% for 5 years. If I don't fix, at the end of December when my fix rate expired and the variable rate kick in at 4.74%. The difference between the 5 years fix and the variable will be around £40 per month. I expect the BoE rate to go up therefore my variable will increase too, but my other friends told me that it will come down after one year or so. I am in two mind as 5 years seems too long. Not sure if I should take the hit for 12-24 month maybe at @6% and then fix at a lower rate.

Appreciate that it is a difficult question, any suggestion/second opinions are welcomed.

Thank you so much.

OP posts:
OrigamiOwls · 19/10/2022 20:55

I'm in a very similar boat so watching this thread with interest!

keeprunningupthathill · 19/10/2022 20:56

I would jump at that rate at the moment

Landlubber2019 · 19/10/2022 20:58

Watch Martin Lewis show from last night on ITV catch up, he discussed fixed mortgages specifically long term fixes at the end of the show.

Interested in this thread?

Then you might like threads about this subject:

General money
Macey78 · 19/10/2022 21:00

We re mortgaged back in September and fixed it for 5 years lucky we got ours at 3.5% and I thought that was a lot back then.

TurquoiseDress · 19/10/2022 21:09

We've fixed for the next 2 years as we're trying to move...but equally don't want to be at the mercy of interest rate rises!Shock

It's really tough right now, nothing is for certain

JLQ1020 · 19/10/2022 21:14

I really don't think rates will come down on the next few years. We are currently in an exceptionally low interest rate that isn't normal.
I would fix if I were you.

Brandnewwoman · 19/10/2022 21:16

Fix fix fix ....I have lived through the 15% rates and had a 10 year fix at 4.98 % which ended 5 years ago .
I know I paid too much over the years but I could afford the payments at 4.98% and I was driven by that -not what could have been .
It was a good decision and although I paid a lot more than I would have on the variable rate ,I knew my house was safe and the increase in its value is in the hundreds of thousands which is a far better return than saving a few hundred pounds a month

allthegoodusernameshavegone · 19/10/2022 21:17

Macey78 · 19/10/2022 21:00

We re mortgaged back in September and fixed it for 5 years lucky we got ours at 3.5% and I thought that was a lot back then.

Same, I just wanted to be able to budget, I only have six years left

Socksey · 19/10/2022 21:20

I'd fix for as long as possible.... at least you'll know how much to expect coming put of your bank every month
I just fixed for 10 years.... throwaway comment while fixing for 5 years and said I would fix longer if possible... and there was an unadvertised one for 10 years... bit their hand off for that one

welshweasel · 19/10/2022 21:20

I've remortgaged today for 5 years at 3.5%. We have to pay a 1% early repayment charge but I think it will be worth it for the peace of mind.

Quitelikeit · 19/10/2022 21:22

I’d fix it if I were you. Historically the interests rates we have been lucky enough to experience for the last 8-9 years were never so low.

the ex Bank of England governor said it’s highly unlikely they will go that low ever again which makes absolute sense

we got a 10 yr fix at 2.75 and we will be royally screwed in ten years if the rates are at even 4pc so the plan is to overpay as much as possible then sell and downsize

today we couldn’t have afforded to buy this house with the current rates

Quitelikeit · 19/10/2022 21:23

Welsh weasel can I ask who your lender is? That is a great rate!!!

I haven’t seen one that low anywhere

AnuSTart · 19/10/2022 21:29

Fix! Good Lord! I fixed for 5 years back in February for 5 years at 1.9 and I am so relieved.
Interest rates aren't coming down any time soon. I think you'd be mad not to (but then I didn't watch the Martin Lewis programme the other day).

BMW6 · 19/10/2022 21:30

I'd definitely fix if I were you, gets you peace of mind and that's totally worthwhile.

SnarkyBag · 19/10/2022 21:36

We moved and downsized in August and fixed for ten years at 2.75%. Counting my lucky stars I put out house on the market on a whim!

welshweasel · 19/10/2022 21:37

@Quitelikeit it's with metro bank

MidnightMeltdown · 19/10/2022 21:38

Tricky one.

I think that rates will come down too, but it's hard to tell whether it will be next year, or 2024.

You can usually get out of a 5 year fix (for a fee) if rates go down

LadyApplejack · 19/10/2022 21:39

@Quitelikeit same! When we started looking it was 4. Something - which then got yanked, and we've been looking at very high 5s ever since! We have 55% LTV too.

3.5% would be a dream. Committing to 5 years at 6% isn't appealing at all, it might not be necessary. So hard!

OneFrenchEgg · 19/10/2022 21:39

We have four years left at 1.24% from last year thank goodness. I would fix now at what I could afford I think.

Spectre8 · 19/10/2022 21:48

Why don't you fix and if you can overpay so you end up paying less interest overall anyway.

I have 3yrs to go until my current deal of 1.69% ends. I am overpaying as much as I can because in the event in 3yrs the interest rates are signficantly higher say 6% it won't impact me as much as I''ll have significantly lowered the amount I owe

Justgivemewine · 19/10/2022 22:01

It depends on how far through your mortgage you are and what your new variable rate would be.

in the early years of the mortgage the ratio of interest/capital is higher so it might be worth fixing for peace of mind and security.

if less than 10 years to go, the ratio of interest/capital is much lower so interest rate rises will have a smaller affect as much more of your payment is capital and it’s harder to get a good deal anyway, especially if you take into account setup fees, early exit fees etc etc

Eg. we only have a few years to go and our current variable rate is still half of the current fixed rate deals. By the time we factor in other fees to fix we are better staying as we are at the moment.

Hobnobsandbroomstick · 19/10/2022 22:11

www.barclays.co.uk/mortgages/mortgage-calculator/interest-rate-calculator/#/interest

Have a play with this calculator to see what the difference between fixing or staying on the variable rate would be if the interest rate went up to say 12%. What's the maximum amount the interest could be before you couldn't pay?

I think fixing for 5 years gives you peace of mind and security. Especially with the rising cost of things and the prediction that the UK will enter a recession next year. How recession proof is your job? The energy price cap has just been cut from 2 years to 6 months, so your energy bills will go up again from then. Prediction is that the typical household bill will rise to £4348 from £2500, which is an extra £154 a month.

Sorry to sound so doom and gloom, but I don't think interest rates will drop down to how low they've been for the last few years for a long time. They've never been that low before when you look at the history of interest rates.

gogohmm · 19/10/2022 22:14

You can buy out of a fix if you need to. I personally would fix, historically rates have been between 4&6%

Iwasjustasking · 19/10/2022 22:19

I bit the bullet and fixed for five years earlier this month, I had debated over it for a few weeks and although not an easy desicion went with 5 years, I’ve fixed at 3.99% so not too bad!

LadyRoughDiamond · 19/10/2022 22:56

I’ve just paid over £2k early redemption charge to fix for 7 years at 3.49%. Do it.
Things should start to stabilise next summer ahead of the US elections, but I doubt we’ll see the low rates of recent years again for a very long time.