Mortgage renewal - how long to fix?

[oneplustwoplustwoplusone]

If you were renewing your mortgage now how long would you fix for?

We (luckily!) fixed for 5 years in Feb 2020 - the longest we had done. DC1 was on the way so seemed sensible.

Been holding out but need to renew again now but can't decide on the fixed term...

For context DC2 starts school in Sept so no more nursery fees. Both in stable, public sector jobs. Can cope with the increase we will have of £200ish per month. Just under 50% LTV

I’m renewing in June, so far been offered 4.31 on a 2 year but Santander are offering 3.99 on either 2 or 5. We are going to hold fire until nearer the time but likely two year. Then a five. I’m hoping to be able over pay to reduce length.

I wouldn't fix at all I'd stay on the SVR for another year

We’ve fixed for 5 years for stability. I kind of wish we’d gone for 3 years but it’s done now. I have no idea really whether we’ve made the right choice.

I’ve got to make a decision this week also, looking at a 2 year fix currently. My last one expired just as the rate shot up so I didn’t go for a fix but a tracker and it has slowly reduced to over the last two years.

Bit I am likely to be selling in 2 years so that is also a factor, I don’t want to pay a penalty.

Current rate is under 2% and SVR we are looking at 7%+ so do really want to fix as well get something around 4%

No plans to sell

I'm not a financial adviser and this is not advice, all my own opinion blah blah but I do work in the industry and people are expecting a couple more bank rate reductions from the BoE before the end of the year from what I can tell. I think rates will probably stabilise around 3.5% ish and stay there or thereabouts for a while. We've just fixed for 5 years at around 4% - if rates go half a percent down we're not missing out too much, and I value the stability of knowing what we're paying over the faff and possible expense of chasing an only slightly lower rate in a couple of years. Our mortgage is small, though, and the difference is £40-50 a month between the rates - obviously if your mortgage is bigger then it shifts things slightly!

It's impossible to say what will end up being the right choice but sometimes 5 year fixes are slightly cheaper than 2 year fixes, which will give you some protection against one situation where interest rates fall significantly if the economy tanks again.

But who's to say where we'll be in 2 years time and whether or not needing to change your mortgage will be a good or bad thing. With everything going on in the world and the new government, having certainty over the next five years might be worthwhile, even if it doesn't end up being the absolute cheapest option.

The other consideration will be the size of your mortgage and what fees are being charged. Paying a fee every 2 years compared with every five years can significantly add to the cost, especially if your mortgage is small, so needs to be factored in. But if your mortgage is larger, it's sometimes worth paying the fee if it gives you a lower interest rate.

I wouldn't fix, you'd be crazy to just now.

We are fixing for 5 years, couple of reasons, firstly, we intend to pay off our HTB with a further advance after fixing, fixing now means we can fix at a 60% LTV rate (which with our current lender is 4.19% vs 4.74% if we were to remortgage the whole lot at once) which means we benefit from a lower rate than our LTV really deserves for the majority of our loan, so want to benefit from this for as long as possible, hopefully after 5 years our equity will be much better so we can then shop around.

But mostly it's the certainty, like many others I've hated the uncertainty of the last 5 years and having a 5 year fix proved a good choice. I want the certainty, we can afford it, and willing to take the risk of paying more, I've no doubt we will pay more, I do think rates will be coming down, but until we've taken the time to really build on our equity our choices are more limited anyway. Hoping that'll be different in 5 years, 2 years isn't long enough for us to build equity, especially as it doesn't look like house prices are doing much atm.

What interest rate would you pay on a tracker?

We’re fixing for 3 years. I’m hoping rates will have gone down by that time to around 3%. 2 years feels too short and 5 years is a long time. We got caught by this when we took out our mortgage in 2005 with a 5 year fix - we had to pay 6% when everyone around us was paying 2% after the crash in 2008. I’m not doing that again.

We took our mortgage out in January, fixed for 2 years. We fixed at 4.59%, but I'm hoping to fix for 5 when it comes up, at a lower rate (better credit rating/history then).

Thanks all. Been holding out as long as we can but rate will jump if we do SVR.

@therocinante interesting that you think it will stabilise around 3.5%... looking at a rate around 4% would be reasonably happy to fix for at least 3 years if that is the case.

Feel like we've had our luck on mortgage decisions so far so 🤞🏻

We fixed for 2 years in January. Very happy with that.

We've recently fixed for 5 years. The rates are so up & down right now that I would rather have the certainty. I'm happy with the monthly amount and would rather have the safety net of paying that a month than the risk of it increasing in 2 years. You also need to factor in any fees. Our mortgage isn't the biggest, but we do have 60% LTV. For us we took a higher rate with no fee. The cheaper rates had a £999 fee, but we wouldn't even save £999 so is not worth it.