Would you fix your mortgage for 5 years at 5.63%?

[MegBusset]

Our fixed rate is coming to an end in April (this is the point where I curse not fixing for much longer as the rate is 4.48!). Anyway the best rate we can get atm is 5.63% for 5 years with no reservation fee. If we went on a tracker or fixed for a shorter period the rate would be closer to 6%.

However, it seems that interest rates might come down further in the next year or so -- and 5 years is a long time to be tied into a rate.

On the other hand, I recall a time when rates were 12% so it could be better to play it safe, 5.63 is still not that high.

So WWYD in our position?

Well it's always a bit of a minefield but we're on a variable rate and it's just been reduced by about 0.35% so it may not be a good plan.

I think rates will come down again. We're sticking with our variable rate of 6% for now.
We've just come off a rate of 4.19%. Wish we'd fixed that one for longer than 2 years.

Even if rates do come down, it seems banks aren't passing on the discounts at the same rate. 5.63 is a good deal and no one is predicting the 4% rates of a couple of years ago - banks need to make back the money they lost lending to sub-prime etc. We fixed ours a year ago for five years at about 5.45% so I would definitely fix.

Our variable has come down 0.5% in the last few months. I think another rate cut is expected soon.

i would;nt fix for this long..thats just me though

If we fixed for two years we would be paying quite a lot more interest, though, or a big fee -- 6.48 with no reservation fee, or 5.68 with a 2k fee.

Also bearing in mind that in two years' time interest rates could well be higher than they are now, and that we would also have to pay another reservation fee to fix again then, we are erring towards fixing now. Just that we will kick ourselves if rates then come down in the next few months...

No I wouldn't fix at any rate for 5 years either. Well 0% might be tempting

I would be reluctant to fix for that length of time if there is an early repayment penalty as your circumstances can change a lot in 5 years, in ways that you cannot predict or might not even want to think about.

There is a 3% early repayment charge. However, we do have a reasonable amount of financial security (some savings, overpayments on mortgage, and LTV of around 60%) so that is not a huge concern at the moment. At least it hasn't been so far, perhaps it should be?

I'd go for that...and if the rates drop enough take out a personal loan for a year, and remortgage to a lower rate. I did this in approx '94, mortgage rate was 10.8 fix for 5 years (those were the days), UK exited the ERM,
I took out a personal loan for the early repayment penalty, and remortgaged at 7.4 fix for 5 years. The 7.4 plus the loan only cost £10 per month more than the 10.8 rate, and I had 4 years at 7.4 after that.

I refixed December 06 at 5.09 for 5 years, and will do so again when this fix ends. It's swings and roundabouts...when I fixed prior to this in 2001, everyone said I was daft as we would go into the Euro, and rates would drop...wrong. What fixing does for me is give me peace of mind over what the payments are. I remember the late '80s/early 90s on a variable which seemed to change every month, and not in our favour either.

Go for it, especially with no reservation fee...my fix cost £750, I nearly had kittens, as I'd only ever had to pay about £150 max before. You can always buy yourself out.

I personally would fix at that as its a good rate in the currentl climate and it does buy you a bit of peace of mind which is invaluable.

Did you get this rate through a broker or find yourself?

I only ask as we recently went through a broker and got told one thing, out of interest looked ourselves on the internet and found a rate of 5.23% fixed for five years through 'Giraffe' mortgages, they are a branch of Bristol and West BS so all above board. We didnt have as big a deposit as you (going by the LTV) and they accepted out application no problem so all things being equal it might be worth giving them a call.

Oh apparently the reason that they can do lower interst rates is that they do not offer this mortgage through brokers [wink}
good luck.e

We haven't used a broker, this rate is from our existing mortgage provider (Nationwide). We are pretty happy to stick with them as their rates seem much the same as everyone else's and it wouldn't be worth the hassle of starting over again with a different provider (DH is self-employed and I am currently a SAHM so no guarantee that we would be accepted anywhere else!).

I'd fix it - in fact we have one at 5.4% fixed for 10 years which is the length of our mortagage - I am super conservative when it comes to our mortgage and we could afford the repayments before I went back to work so I know that barring dh or I punching a child in the face and getting the sack we can afford the repayments and besides I like knowing what we have to pay each month.

Where do you see your financial situation in 5 years - in an ideal world?

I think its best to fix.The rates may come down once more this year to try and boost the economy but these cuts are rarely passed on atm and banks are very wary.With inflation rocketing the long term trend is more likely to be raised rates so it sounds a good deal.

I'm similar to Lucycat, but far more conservative! We have a 25 year fixed mortgage at 5.65%.

I like the fact that we know exactly how much our mortgage paymetns are - it gave me the confidence to give up work to look after DD, safe in the knowledge that the interest rates won't affect us.

I have just fixed our mortgage for 5yrs at 4.99% we did hesitate but decided in the end that we preferred knowing exactly what our biggest monthly outgoing would be for a decent stretch of time. The rate is competitive and the fee was ok (£600).

Only you can decide what you can live with - look at what is available and remember you are paying for security by fixing your mortgage so it depends what you can afford and how risk averse you are.

I've just fixed ours for 5 years at 5.63% with Nationwide. My main concern is to know where we stand and I know we can afford the repayments at that rate so I don't care whether they come down or not.

TBH if the rate was 4.99% we wouldn't think twice about it. Just that mentally going from 4.48 to 5.63 and tied in for 5 years seems a big old jump.

We went from 3.99% to 5.63% a concept which admittedly took some getting used to (and the higher repayments haven't even kicked in yet!).

Hi Meg - yes we were very lucky to get this low rate as the bank have now stopped using it (First Direct) - but we are also have to move bank accounts as it is an offset mortgage so it has been a bit of a pain paperwork wise but I am v glad to be leaving Halifax as I cannot stand their twattish adverts!

I hope Moz has a nice firm grip - it would be so disappointing to learn he had a limp handshake?!

It was very firm, you'll be glad to know... and he was drinking a pint at the time

great dd just urinated on me while I typed that!

So thats around 1% which is £65 (approx) for every 100k you owe.

If you want to know what your mortgage is going to be, then of course.

If you don't mind taking a gamble, NO ONE knows what might happen in the next year, then opt for a smaller fix.

Personally I would go for the longest fix you can get if you know pretty much for sure that you are not leaving the house, unless something extraordinary happens - lottery win etc.