2 or 5 years fixed mortgage?

[Orangebadger]

Mortgage is in 2 sub accounts, one part ending Feb ‘27 the other Nov ‘27. 12 years left in term. Bank have given offer of merging the 2 which increases cost by £150 per month, so not at bad as I thought. Similar rates. Really nothing in it to choose between 2 or 5 year other than our own opinions on what may or may not happen and I guess our feelings towards risk.

Curious about other people’s thoughts and what others in a similar position are choosing and why?

I always choose 5 years, because interest rates appear to be on an upwards trajectory. My current 5 year fix is serving me quite well given the financial climate.

My take is always if I can afford it now to fix for longer then I don’t need to think about it for another five years. Also the up front product fee is usually a grand or so too which can eat into any potential interest savings between y3-5?

2 years.

Personal opinion is that 5 year fixes are inflated at the moment because of uncertainty in the international markets, plus the situations in Ukraine & Iran. A 2 year fixes will get you to the other side of the next US election and a more settled international stage which on turn, should lead to better rates avaliable at that point in time.

Ive just done a 5y fix again at 4.95%, after being on a 5y at 0.99%! I know the advice is that fixed are inflated at the moment and a tracker would quite possibly work out cheaper over the 5y, but I've reduced the term to 10y as well and am going to chuck everything at it over the 5y and just can't handle the stress every time some fuckwit starts a war and interest rates go up.

5 years

As you say the rates are about the same I would go with the 5 year Fix. You know you can afford it & that's the least stressful option. You'll kick yourself in two years if it's gone up and with the way the economy is going I don't see it going down, but even if it does, how much do you think it's gonna go down by? It's certainly not going to go down to what you're on now, so at the very most, you're gonna save 150 quid a month in years 3 to 5 at best.

Martin Lewis covered this on his show last night, might be helpful for you. I'm fixing for 3 years, extending the term to the max to manage the leap up in monthly repayments. In two years I'm going to reassess and sell up if I'm facing another jump up in costs. That gives me the last year of the mortgage to get the house in order and sell if I need to.

You see it won’t really get me to the other side of the election as that will be Jan ‘29 when the next president will actually start. And a 2 year fix will finish then. I don’t think that will be a magic moment for the markets and even if things stabilise politically it will take time to trickle to the markets. A 3 year would be ideal though, but sadly not on offer.

Yes this is my thinking! I am currently on a 1.2%!!

There's no right answer, but it's worth checking whether merging means paying an early repayment charge on the part that runs to November, and whether the bank lets you fix each part separately instead. A whole-of-market comparison is also worth doing before you accept, because your current lender's offer isn't always the best one. With 12 years left, a longer fix gives certainty, while a shorter one keeps your options open, so it really comes down to how much payment certainty matters to you. Hope that helps.