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Original poster

Mortgage fix for 2/5/7 years?

6 replies

babynosebleed · 22/09/2022 14:24

How long would you fix for? I got an offer for the below, monthly payment is pretty much the same

&bull;	3.13% 2 year fixed, &pound;999 arrangement fee included in the monthly payment 
&bull;	3.15% 5 year fixed, &pound;999 arrangement fee included in the monthly payment 
&bull;	3.18% 7 year fixed, &pound;749 arrangement fee included in the monthly payment

OP posts:

Testina · 22/09/2022 15:47

Nobody can answer that for you.
You are the only one here who knows your attitude to risk, what your finances are, and what is likely to happen in the next 7 years of your life. All that would impact my decision making.

Last December, I fixed for 5 years.

Why not 2?
Because I knew that even if the market rates dropped in years 3-5, the actual £ per month wasn’t huge. So I was buying peace of mind at a low price.

Why not 7?
Because I knew that if I came out of the 5 year fix to sky high interest rates I had the following to consider:

I’d only have 5 years left, so the £ impact of a huge rise wasn’t crazy
I’m over paying so I might have less than 5 years left
my mortgage is a relatively small % of my salary so I can take some increase
by 7 years, I may well have received some inheritance
I have savings which could reduce the mortgage balance

You have to walk through your own reasons.

mynameiscalypso · 22/09/2022 15:50

Those aren't bad rates. I'd fix for 5 years (quickly!) - that's what we're looking to do.

blebbleb · 22/09/2022 15:50

It depends if you plan on moving anytime soon. If you can afford it and want to stay, I'd go for 7 years. We're currently looking at another 2 year fix but this isn't our forever home and would prefer the risk. I know you can port/move some mortgages but they have to reassess your affordability anyway.

Original poster

babynosebleed · 22/09/2022 19:25

We are planning to move in the next 3-4 years probably.. but who knows what interest rates will be then.
2 years feel too short.. so we might go for 5 years but just curious to see what others are thinking!

OP posts:

Original poster

babynosebleed · 22/09/2022 19:26

It's just a bit of shock as we are currently at 1.43 😢

OP posts:

BarbaraofSeville · 23/09/2022 07:10

Have you accounted for the effect of the fee?

The fee per year on the 2 year fix is £500, but only just over £100 per year on the 7 year fix, so could be a significant factor depending on the size of your mortgage.

But those rates look pretty good, less than 1% over the current base rate, which probably hasn't stopped increasing yet.

What are the relevant early repayment charges and would you have to sell up in the event of one of the dreaded three Ds happening (death, debt, divorce)?

I'd be strongly tempted to go for the longest fix, moving is probably a red herring if the product is portable.

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