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Original poster

Fixed rate mortgage - 2 yrs or 5?

36 replies

SuperBunny · 23/02/2010 22:52

Am about to apply for a mortgage but am not sure if I should fix the rate for 2 yrs or for 5. How do you decide?

OP posts:
jammietart · 23/02/2010 22:53

what's the rate?

Original poster
SuperBunny · 23/02/2010 22:53

Or even get a tracker? Have always had fixed rate in the past but not sure what to do now.

OP posts:
Original poster
SuperBunny · 23/02/2010 22:57

2 yr at 3.89 - fixed rate
or
2 yr tracker at 2.99

I can't afford the 5 yr one so that's out!

OP posts:
paisleyleaf · 23/02/2010 22:58

I really appreciated our mortgage payments going down with the interest rates.

Original poster
SuperBunny · 23/02/2010 22:58

Are interest rates going to stay where they are? Or rocket? I remember days when they were about 15%

OP posts:
Original poster
SuperBunny · 23/02/2010 22:59

They can't get lower than 2.99 though, can they?

OP posts:
butadream · 23/02/2010 23:01

Check the difference in the arrangement fees between the two 2 year choices - that might make a difference as to which is cheaper for you.

SazzlesA · 23/02/2010 23:04

This reply has been deleted

Message withdrawn

jammietart · 23/02/2010 23:04

its always going to be dependent on your circumstances. But interest rates are only going to go up from here but when and how quickly is the unknown. We have done well out of our present mortgage which tracked base rate plus .5% so whilst everything else has gone bad for us in the recession our mortgage as gone down and down.

Original poster
SuperBunny · 23/02/2010 23:07

It's so hard!

I think I'll go for the 2 yr fixed rate and worry about it in a couple of yrs. Although, if I go for the tracker and the rates start to increase a lot, can I then change to a fixed rate?

The fees are the same so that doesn't make a difference.

OP posts:
butadream · 23/02/2010 23:10

If you go for the tracker and the rates start to increase a lot, you can't normally change until the 2 years are up, usually there would be a redemption penalty of ££££££

jammietart · 23/02/2010 23:11

You could go for the tracker and over pay the diff for the period it takes to catch up to the rate you were prepared to pay on the fixed. Its so tricky though and 2 yrs is no time
Good luck!

maggiethecat · 23/02/2010 23:39

We almost went for a 2 yr fixed for 3.7% but decided on an ING tracker for the life of the mortgage - 2.39% + BoE base rate = 2.89%. Arrangement fee and booking fee of 700.00. Important thing is that there is NO early redemption fee!
We decided that we would take advantage of the low base rate and if rates did start to increase we could jump on to a fixed deal. Most trackers do have early redemption charges - this was one of the few that did not. Also max LTV of 75% is very reasonable.

gaelicsheep · 23/02/2010 23:46

I think just now the tracker would probably be the wrong decision as rates can only rise from here. I would fix for 2 years. I take it there's no tracker that doesn't have a tie in period?

maggiethecat · 23/02/2010 23:49

The ING Direct deal does not have one - unless I have misunderstood the terms. We decided that if we can jump out at any time then we may as well take advantage of low rates for as long as they last.

gaelicsheep · 23/02/2010 23:52

SuperBunny - a deal like maggiethecat describes would be a good bet in the current climate. We are very very lucky that we took out a lifetime tracker 2 years go that has no tie in. It's the first time we've ever been on the right side of interest rate changes.

Monty100 · 23/02/2010 23:58

at 3.89! I just fixed at 4.89 for two years but didn't have to pay a fee on that one and I wouldn't have got it back on another slightly lower rate because there was a £599 fee.

It's fingers crossed tho', we don't know what the economy will do, we have an election coming up and don't know what the politicians Treasury will do, so at least we'll know where we are for two years!

Hope that sounded half sensible and comforting.

maggiethecat · 24/02/2010 00:06

It's difficult and all a bit of a gamble. We were forced into switching bcos altho our fixed had expired and we were happily paying less each month having gone onto the svr we were caught by Skipton's dodgy dealings and faced a 200/month increase in March. Looked around for a new deal and almost went with a fixed since the trackers all had early redemption charges that were unattractive. I stumbled across the ING deal and hope it was the right move. I find it a bit unsettling that it is not listed in any of the broadsheets best buy mortgages given the lenient terms - hopefully I havent missed anything untoward.

Monty100 · 24/02/2010 00:25

Hmmmmmmm. I wouldn't have thought you could have missed anything.

Sometimes they keep the good deals quiet because they've launched them, but then for other reasons they're hoping no-one buys them ifyswim. In those cases they are a good deal! Fingers crossed.

I'm sure you've looked over it well tho.

Monty100 · 24/02/2010 00:26

Sorry OP that was @ Maggie.

Original poster
SuperBunny · 24/02/2010 18:21

That sounds like a good deal. I think I have to go for the 2 yr fixed rate this time. Am in a tricky position and only 1 bank will give me a mortgage, despite having a decent income and a deposit of about 45%. Tis most frustrating but makes selecting a mortgage provider but easier. Thanks for all the help.

OP posts:
noddyholder · 24/02/2010 18:24

5

Original poster
SuperBunny · 24/02/2010 18:49

5 yr fixed rate is at 5.49 so is a lot more each month. And in a couple of yrs, I might be able to afford more but for now, that's an awful lot more than the 2 yr rate.

OP posts:
ThatVikRinA22 · 24/02/2010 18:57

ive been a bit stung by a fixed 5 year deal - im stuck paying more than i would be - i fixed 3 years ago at 4.99%.

saying that they were alot more than that a couple of years ago so i think it all balances out in the end.

i think while they are low id be tempted to go for the tracker and save if you can for a rainy day

Original poster
SuperBunny · 24/02/2010 19:50

But will they stay low for 2 yrs?

OP posts:
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