Mortgages - how long to fix?

[LGBirmingham]

We're coming to the end of our 2 year fix in July. We were all set to get a deal quite a bit cheaper but world events have made that less likely.

I'm wondering if we should actually get a 10 year fix on a higher interest rate (still cheaper than our current deal) or to do another 2 years on the lowest rate? The world is pretty turbulent right now.

I'm canvassing for people's thoughts as I have no idea!

You can usually book a new rate up to 6 months before yours is due to expire.

We got a 10 year fix in 2018. Best move ever. Rates were so low then.

Depends how different the rates are. I usually go in between (5 year fix).

I mean I've only looked at nationwide who are our current provider but 2 years is 4.09%, 5 years is 4.24% and 10 years is 4.77%.

Last time I checked before recent World events we could have had 3.89%.

Yes but it's a very different time to 2018 financially. It's hard to know if rates will come down again. Don't want to be stuck on a high 10 year fix. We could clear a fair bit extra of the debt on 2 years on the lower rate, but maybe that's not worth it if our rate then rockets by say 2-3% after.

Depends on your financial position and risk appetite. Also if you want to overpay by more than is allowed under a fix.

When my DC were in nursery I fixed for 5 years, because there was no give at all in my budget.

What might your position be in 5 years time? Eg kids at nursery still and part time work, or be likely to have got ahead in your career?

Martin Lewis gives some good advice on how to make financial decisions, though I can’t find it right now.

https://www.moneysavingexpert.com/news/2015/02/the-secret-to-avoiding-bad-financial-decisions/

I think it depends on your current outgoings, how tight things are already and if you’re expecting a promotion or big pay rise.

We fixed for 5 years last time because we had childcare costs and needed to be able to afford both. Had we not had childcare costs or planning a child, we’d have likely gone for a two year fixed but we could potentially get new jobs/promotions if things got tight.

If you go for a longer term one, you need to work out what % it’s cheaper to buy out of the higher interest and move to a lower one.

We are just fixing for 2 years, agreed in principle before Trump started. No big jumps expected; very risky to fix for 5 years; even worse at 10 in the current climate. (I am not a financial advisor this is my own opinion)

If I thought interest rates were going to drop I wouldn't fix.

If I though interest rates were going to rise, I would fix.

Fix for 10 years but overpay what you allowed to each year. That way actual monthly amount will be reviewed each year.

I'm likely to get promoted within next couple of years as I changed career so still progressing, dh is unlikely as reached his level probably. We can comfortably afford our current payment and could over pay a bit more. We have one primary aged child so we are still paying for some wraparound and holiday clubs.

Not complaining, but my promtions/pay rises, despite being above average in the company apparently, just seem to keep us ticking over rather than making us better off due to col.

The monthly payment won't go down with some mortgages only the term

I would see how much the early repayment would be in a couple of years on the 10 year fix, if it would only be a small charges then you could still switch the mortgage after a few years if interest rates do plummet but you'll have the fix locked in for safety for 10 years

Have you been keeping an eye on the news recently? They're predicted to rise again now.

I'm curious, why do you think it's more risky to fix for longer?

There is a difference between bad decisions and bad outcomes. When it comes to fixing it is about balancing what might happen with what might not happen as well as factoring in security.

We bought our first house in late 2016 we could have had a 10y fix for 2.2% or a 5y fix for 1.6%. We went with 5y, we moved in 2022 and took out a second mortgage for the difference this was now at 2.8% also fixed for 5 years. We had 7 months left on our first mortgage. It looked like a fairly neutral decision, there wasn't a huge difference between 5y at 1.6% followed by 5y at 2.8% Vs 10y at 2.2%. The interest rates in 2016 were pants so we overpaid the first mortgage massively in the first 3-4y before saving more money for the move.
A month after we moved the week we got the notice to say we could renew our original mortgage the bank if England put up the base rate followed by the Liz truss budget a few days later. We had already booked to speak to the advisor with our mortgage company and this was the best move we have made as this looked us into the rate pre rate rise and budget. We got the mortgage for 3.8% by the time we had the appointment we had booked the rate they were offering was ~7%!
As it was it wasn't a bad decision to fix for 5 years, it would have been better to have fixed for 10 years and we had 5 years where we paid less than we would have done on the 10 year fix. We view as a neither good nor bad decision and for us the outcome was slightly worse. Had we had to remortgage a few weeks later at the height of the interest rates it wouldn't have changed the decision but the outcome would have been worse.

We are part way through our 5 year fixes and so far fixing for 5 years has been the right decision and hopefully will have a good outcome. For most of the time for these mortgages we have been able to save at a higher interest rate. We have to wait to see what the interest rates will do in 2027-2028 to work out if we will have good outcome. We favour the longer term security in knowing what our mortgage will costs us and the headspace of not going through renewals that come with 5y fixes.

With the rates you have been offered I think I would be taking a punt on the 5y year deal.

Fixing for 10 years is really bad idea. Especially if buying with someone else and there’s a chance that you could spit up or need to sell the house. The sum that you need to pay to get out of that deal will increase every year. Fix at 5 years max.

We fixed for 5 years last time. We have quite a good amount of equity and we just didn't think all the madness would be over in 2 years.

Given the rates you have mentioned I'd probably go 5 years.

We fixed for 10 years about 4 years ago and our rate is 2.04% so we are very happy that we did. We’re also paying off a chunk each year to avoid ERC and by the time we’re at the end of the 10 years there will be minimum left to pay.
I probably wouldn’t fix for 10 just now but depends if you want the certainty.

We've just had to renew our mortgage, due end may.
Fixed for 5 yrs previously on good rates. Used the mortgage advice bureau which checked against most on the market and could get nothing cheaper than about 4.5%. We've fixed for 3yrs this time to hopefully allow the market to settle, but it's added £200/month to our bill.
He advised products are being pulled with little to no notice. I'm impressed you can get that rate still with 6months to expiry. We could only check 3 months prior to current mortgage expiry.

We usually do 2 year fixes however in 4 years we've gone from 1.69 to 4.49, just fixed again for 3.98 but for 3 years on this occassion and just managed to secure it as they started to rise again. We have a large mortgage so every penny counts, weve kept the payments roughtly the same but dropped the overall years. I think it will get worse before it gets better but 10 years at that rate seems to long for me personally.

It depends on how much you owe and how much the erc is, if it's 1% on £100000 you'd only need to pay £1000 if you needed to sell in the event you split up, which might be a risk you're willing to take for a more stable mortgage rate that you're comfortable paying for the next 10 years. Most early repayment charges decrease over the years, year 1 might be 3%, year 2 2% and then year 3 onwards 1% for example I think it'd be rare for erc to increase the further down the line you are

If one person on here can predict how interest rates will go in the next 2-5 years, then you need to introduce us. We were all looking for an interest rate cut until the orange one screwed everything up again. You might as well literally just whistle in the wind until he gets out of power.
However, in my opinion, I would go for a 2 year over a 5, assuming it will all calm down. But I am pro greater risk, greater reward. If you are “conservative” and hate risk, then you should absolutely fix for as long as you possibly can.
The basic question is, what do you value most? Perhaps overpaying for years as interest rates might come down, but it’s fixed and you know exactly what you’re paying for 25? years? Or you ride the ups and downs?
As far as I am concerned, this isn’t actually a choice between rates? You have to decide first, and mainly what your attitude is to riding the waves of interest rate changes