Remortgaging - two or five year fixed rate?

[Toospotty]

What the title says basically. We’re remortgaging and are being offered both. The five year is tempting as it insulates against global shock (and let’s face it, it’s fairly scary out there) but if rates are marching downwards, will we regret our five year in two years? Both rates are below 4% but nowhere near the 3.5% forecast for the end of the year, but we need to remortgage now and not wait, so we accept that we’ll miss out on any further reductions in 2025 whatever happens.

I realise no one has a crystal ball or we’d all be billionaires but would welcome thoughts. We’re leaning to the five year at this point.

I’m in the same boat and can’t see that much movement in the next 5 years to risk going for 2 years personally.

I’m doing the same and decided on 5 year fix.

I’m interested - my head of full of ‘what ifs’ around the global scene. Do you feel confident of this leaving interest rates stable? This is my big sticking point on the two year.

Personally I went for 5 years.

my theory was 'God knows what's going to happen the way the world is right now. I can afford this & value the stability over the very small possible amount it will cost me IF the rates drop'. & I personally don't think it's likely they'll drop much anyway.

I might have thought about it differently if my mortgage was bigger, I'm not sure.

No, I don't. Too much global uncertainty to be even remotely confident of any stability around anything basically.

@devildeepbluesea I think I've misread your post and you're also leaning to five years?

Do you definitely have to fix @Toospotty ?
Or could you go on a tracker mortgage for a few months with a view to fixing at the end of the year depending on what happens?
More of a risk of course but might work out better for you in the long run.

Yes I am. 5 years all the way. I’d probably pay thousands not to have to go through it all again anyway 🤣

Following. I am in the same position and am leaning towards a 5 year fixed.

We did 5 years - and I wobbled about rates going down- but it also based on youngest being mostly done with education - 2 years a-levels 3 uni and while that may vary we'll know more how close we are with DH job and wanting to move for next one.

We can still overpay with the increase in rates form prior fixed rate and the mortgage is low compared to many others.

2 years it could be higher rates or lower as so much uncertainty.

We need to extend borrowing and move lender so we can’t just stay on our current mortgage. We’ve got a tracker now and are keen to move away from it as the fixed rate will save us quite a bit - like PP say, I really don’t want to have to do this again any time soon!

My mortgage broker said 90% of her clients are going for 2 years. But I always think they are incentivized to encourage 2 years as it comes round again so quickly and keeps them in fees/ work.

I went for 5 years to mitigate against the uncertainty in the next few years. Moving from a rate of 5.4% which I did not enjoy for the last 2 years to one sub 4% which I can make peace with.

My gut says 2 years as I think it will be cheaper rates by then. But just a hunch!

If you can afford the mortgage now, I’d go for 5 years. So there’s a possibility you may pay a bit more than you could’ve but I like the comfort of knowing what I’m paying and my books balance each month.

Go for the 5 year. 2 years goes by so quickly and you'll be having to remortgage again before you know it

I’m in the same position and going for 5. I might lose out a bit, but who knows what crazy thing will happen in the next two years.

When we took out our mortgage last year we went for a 5 year fix. There is no guarantee rates will go down in 2 years, but there is guarantee you will have to pay another arrangement fee in 2 years if you fix it for 2 years.

We are remortgaging in a few months and I think I would lean towards 5 years. That would take me past the orange on being in power.

Honestly, given how things have been over the last 2-3 years, I'd go for 5 years for anything under 4%.

I would go for 2 years, as rate will go down in the short term.

We are currently 2 years into a 5 year fix at 4.1%, which isnt too bad. But anything sub 4% would be nicer!

I'm in a very similar position myself. My current 2 year fix with HSBC is due to end in August this year and I'm currently just over 5%. Fee free 2 year fixes with HSBC are looking at 4.59% (70 LTV) or 4.29% (60 LTV) where as the 5 year fixes are 4.19% (70 LTV) and 4.09% (60 LTV).

My mortgage isn't massive (£120k) so going fee free seems to be the best option when working out the numbers.

I've always done 2 year fixes, sometimes it's worked out and sometimes not. However this time I am tempted to go for the 5 year fix instead. I don't plan on moving house during that time so not real risk of early payment charges etc.

I think it's futile to try and predict rates aligned with global uncertainty. There is always some element of global uncertainly and the global economy doesn't always behave in a way you would expect it to. I think that interest rates in the UK will slowly reduce over the next couple of years, but not to anything near what they have been the last 10-12 years.

The material difference in monthly payments of a 2 Vs 5 year fix is pretty small. The only reasons I think I would go for a 2 year is if I thought I might move house in the next 3-5 years OR if I thought that interest rates will be materially lower in 2 years time.

Whatever I do I think I'm going to either reduce my term by a couple of years OR keep it the same but keep paying monthly at the level I am today to try and pay it down a little faster as I still have 19 years to go and I'm 43.

We spoke with mortgage person yesterday. They said the banks have already factored a rate reduction into the current offers. We have fixed with Halifax, five years, think 3.8%.

What is the penalty to exit the 5 year rate if you see a better deal eg after 2.5 years in?

I'd be inclined to go for 2 years as I think interest rates are on a downward trend towards 3%.

Early redemption is too high to make it worth doing unless rates literally went back to 0.5%.

There are arguments on both sides, and I waver by the hour. We've asked for an offer on the 5 year but that's obviously not set in stone yet. We're yet to check our second broker's offers although they're looking less good. We have a sizeable mortgage unfortunately and the extra borrowing takes us into a less favourable LTV (we're looking to overpay to the max 10% monthly in the hope that we can bring it back down but the 5 year also makes this more likely) so we don't have the best deals open to us right now I don't think.

It doesn't seem out of the question that rates will be under 3.5 in two years but unless they are dramatically lower I think we'll value the security of the rate over potentially a small saving monthly so I'm leaning to 5 year still.