Re-mortgage - how long to fix for?

[vilamoura2003]

I wish I could make a decision, so confuddled by what to do for the best. I like fixed rate, knowing how much I have to pay and that it isn't going to go up. I am due to come to the end of our current fixed rate and so am looking around at a new one. There is now a 10 year fixed for 2.49% with first direct, but I have seen other people saying fix for just 2 years and you can get 1.3%, but then they are saying rates are going to go up, so when I remortgage in 2 years, I probably won't be able to get a 2.49 again 😬

It's like gambling, how much are rates likely to go up by in 2 years 🤔 If i remortgage again in 2 years surely there will be more fees to incur etc.

I arranged my current mortgage with London & Country but I know they don't deal with first direct so they are definitely not going to recommend
I go with them 😂

Any ideas?

The problem with fixing for only 2 years is that you will have high fees to possibly pay again after that. 5 years is the safe bet I think

Fix for as long as possible, there's only one way interest rates are going to go.

It's a tough one and I think we will be in the same position next year.

We overpay a massive chunk every month so I lower rate will be good for us and we always fix on products that don't have a fee.

Realistically rates aren't going to go up too much in he next few years are they?

I thought London and Country were whole of market?

I used them for my mortgage but I was limited anyway because of doing shared ownership with 5% deposit

We've actually done well for some time by repeatedly fixing for two years, as our LTV improves each time and our interest rate has gone down. People have been saying interest rates will go up for years now and friends who fixed at 5%+ for 5/10 years now regret this. We now have a 1.5% mortgage.

Also look into whether the fixed rate loans allow any overpayment - most have a limit on how much you can overpay, so if you've taken a long fixed rate you can't try to pay down more quickly.

Another thing to consider is whether there is any likelihood that you might need to break the fixed rate period... 10 years is a long time to lock in, especially if there is a chance you might move or sell during that period - change of job, divorce/remarriage etc. If that happens, you could be up for some heavy break costs (unless you can port it across to a new property)

You could go to a professional and have them make some calculations for you, showing different options, and what it would mean to you. All the points already mentioned are valid. Where I am, people tend not to bind at all. A bank I trust (no name mentioned here) wrote "A more important question is how important is it for you to reduce the loan securely on the known schedule and to keep the loan management expenses unchanged."

I wouldn't normally fix. We've never fixed and it's always been better off for us. We have a lifetime tracker that is currently about 0.6%. Are lifetime trackers still available? What sort of rates are they on these days?

Having said that, fixing at the currently available low rates for 10 years could work out well. You won't have to worry about changing your mortgage again for a long time, but do consider what it would cost if you want to move or need to sell for other reasons in that 10 year period. Some fixed rate mortgages can be very expensive to get out of.

If you are fixing every 2 years, you need to consider the impact of fees, which could be very high. Also if something happens that means you don't qualify for a new deal in 2 years time, you could be stuck on an expensive standard rate.

I don't see rates increasing significantly in the next few years though - there is a lot of personal and business debt out there and increases in interest rates would totally fuck the economy.

Tough question! We remortgaged 2 years ago and really couldn't decide between a 2 and a 5yr fix. We were remortgaging with our existing lender and no fees for either option, but obviously lower rate on the 2yr fix. In the end we fixed for 5 years as a 2 year fix would have meant next remortgaging whilst paying 2 x nursery fees which I felt could be an issue. I was also convinced that rates were going to increase after the general election. Fast forward 2 years and rates are even lower! So if we were to have fixed for 2 years last time not only would the rate have been lower, we would be remortgaging again now with low rates and a better LTV!

It's so annoying but I guess it could have just as easily gone the other way...