2 or 5 year fixed?

[Definitelysometime]

I know there are quite regular posts on this but I can't see a very recent one... we're about to remortgage and are holding a two year fix at 4.08. The five year fixed is at 3.89

I (obviously) like the idea of five years' stability, but don't want to pay over the odds for the last three years if it's likely to drop...

WWYD?

Well, you've recognised one of the major risks. Another might be if you needed to move etc and the penalty for early closure (not sure if fixed deals are portable).

It's really up to you! Of course no one wants to overpay but you might (or you might not) for the stability of knowing your next 5 years repayments.

The 10 year fixes all seem to be around 4.8% and more than the shorter terms so pricing in a rise- at some of the peak rates 10 year fixes were cheaper than the 2/5. i’d personally go for the 5 year- getting a rate in the 3s is much better than many were able to get last year and is pretty good historically.

We went for a two year fix, because we plan to move in the next couple of years. The early repayment charge at our lender is far higher for the 5 year than the 2. And the difference in monthly payments didn't seem enough to take the risk of rates falling in 2 years time.

Are you doing a product transfer (staying with the same lender) or actually applying for remortgages to get the best rate? If it's a remortgage, you might find better 5 year deals that make the risk more worth it, and the paperwork hassle means a 5 might be better than a 2. But because we wanted a product transfer, 2 years was fine for us.

If we were staying put, we'd have been more tempted by the 5 year but probably still ultimately gone with the 2 I think.

Most mortgages are portable, in which case whether you plan to move or not doesn't really matter. Is yours portable?

What's the difference between the two rates in £?

When do you have to make the final decision. I would go for the 5 year. But if you can hold off, lets see how the budget goes and next months BoE decision.

hopefully if you are in the 4month window, you can pencil in the 5 year for now, and see if that drops before your deadline. But 5 year would be my preference

This is one of those financial decisions where you just can't have it all ways - a 5 year fix means you don't get the benefits if interest rates go down, but you also don't get the costs if they go up. You have to decide whether you want to go for that trade off or take the risks both ways.

I fixed for 5 years at 3.95% purely to avoid the faff of remortgaging in 2 years. I think that's a valid reason - time and peace of mind are not worthless.

Thank you all, this is really helpful. The difference between the two is negligible really, around £40-50 per month. But it adds up over the first two years to help buffer the remaining three.

I think we'll go for the five as it stands. We don't have to press the button for a few weeks - end of November or first week December at a push. So maybe it'll even come down a tiny bit more!