We've come to the end of our 2 year fixed rate mortgage and have got a number of options from the bank to change our mortgage. This is the first time we've ever had to do this and we want to make the right choice!
Basically we can choose from 2y,3y,5yr or 10yr fixed rates (we want to stay on a fixed rate so we know our outgoings). We owe about 120000 which is about 75% of the house according to the bank- we put down a 10% deposit on the original house price of 136000. Our mortgage is 650 a month now but could drop to anywhere from 510 on the 2y to 580 on the 5y (discounted 10y!) the rates are all around 2.5%.
Obviously the extra money would be nice as we have been doing up the house slowly ourselves ,but we are comfortable and can afford the repayments ,both have relatively secure jobs. We do have a loan and childcare bill which will be finished up in 3years, so would be more financially stable then to remortgage. However interest rates will have to rise at some point so would it make sense to go for 5years to see that through and build some equity and be better off financially to weather the rise?
I really don't know what to do! Our mortgage repayment at the mo is about 20% of our income and affordable were saving £500+ a month so the extra money is not a deal breaker but I do want some security of payments.
House prices round here (Lincolnshire) have been rising slowly but prices are unlikely to shoot up as they have in other areas so wouldn't bank on that.
If anyone could offer some advice I'd be most greatful!