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Original poster

Mortgage interest rates

17 replies

Creamegg11 · 24/05/2021 23:08

I’m coming to the end of my buy to let mortgage and need to find a new deal. Can’t decide between the 5 year fixed at 2.03% or 10 year fixed at 2.43%. What are peoples view as to how soon the interest rates will rise in the future? Thanks

OP posts:
sst1234 · 25/05/2021 01:20

Impossible to offer a view without knowing the level of risk. Asking when interest rates will rise is a piece of string question. What is your LTV? How much outstanding? Rental yield?

ThisIsStartingToBoreMe · 25/05/2021 02:58

I wouldn't fix at all.

Low interest rates are the only thing keeping the tories in power. They will do everything they can to ensure it stays that way.

person6743 · 25/05/2021 10:10

I'd be very tempted to fix for 10 years on a rate like that if I knew it was very likely I'd keep the property for 10 years. I hate the uncertainty of interest rates and would be very happy to pay 2.68% on my mortgage to know it wouldn't move for 10 years, even if slightly more than I'd pay on a shorter fix. I'm surprised that gap between the two is that small. I guess the two main questions would be is the rate affordable to you, and are you planning on keeping it for 10+ years.

Youngatheart00 · 25/05/2021 10:13

Be careful of the early repayment fees in such a long fix. They may tell you the mortgage is ‘portable’ but you end up paying fees for this AND have to meet their criteria again (whatever that may be at the time). We were declined a house move because of a change in DH circumstances and therefore have had to pay £17k in early repayment fees on a long fix even tho we had no problem getting a mortgage elsewhere.

That’s a very long winded way of saying I’d definitely go for the shorter fix

Silkiecats · 25/05/2021 16:42

If there is no chance you will need to sell within 10 years and can afford 10 year rate i would go with that, otherwise 5 year.

SuperFairy · 26/05/2021 00:05

Don’t fix. I took a massive chance years ago and went for a lifetime tracker, I appreciate that they can’t be had these days.

BUT my tracker is at 0.5% above bank base rate.

Are there any low rate trackers that you can go for?

The massive advantage is that you can overpay as much as you can and with interest rates as they are you are paying bugger all in interest.

SuperFairy · 26/05/2021 00:29

If you want to overpay,, even for once a year, please check your contract.

Most fixed rate mortgages don’t allow overpayments and if they do you will be charged heavily for that privilege.

SuperFairy · 26/05/2021 00:34

And also, and not wanting to teach granny to suck eggs but.......

If you overpay your mortgage by £50 a month you will save thousands in interest

If you have some cash left, pay the mortgage rather than the saving account.

alwayswrighty · 26/05/2021 06:27

Most fixed rate mortgages don’t allow overpayments and if they do you will be charged heavily for that privilege

Not true. Most lenders will allow a 10% overpayment per year, its over that you'd get charged an erc.

person6743 · 26/05/2021 07:39

I've always overpaid my fixed rate mortgage, up to 10% as said.

MaudBaileysGreenTurban · 26/05/2021 07:42

Yes, our new 5-year fixed allows overpayments up to 10%.

Badgertastic · 26/05/2021 07:43

I would echo silkiecats if you know you are going to be keeping the property for 10 years plus, then go for the 10 year fix. If there is any query on that, go for the 5 year. You need to consider the early repayment charges on each if you need to sell it. If selling it is not in your 10 year plan then fix for 10 years.

sashagabadon · 26/05/2021 07:46

I think 10 years is way too long. Anything could happen in that time. I’d go 3 years personally but do 5 if that suits you

theonlywayisup33 · 26/05/2021 13:29

If the payments aren't too different then 10 year fix

leftout1 · 26/05/2021 14:01

There's no way I'd go for a 10 year deal. Rates will be staying low for a while. 2.43% seems high.

Notyetthere · 26/05/2021 16:04

@SuperFairy

If you want to overpay,, even for once a year, please check your contract.

Most fixed rate mortgages don’t allow overpayments and if they do you will be charged heavily for that privilege.

Not quite true. I actually have not come across a mortgage that doesn't allow overpaying to a certain level. Most of them at least allow a 10% overpayment.

10 years is along time. I would go for the 5 year term. A lot could change in that time and I can imagine hefty ERCs in the initial years if you had to redeem it.

Original poster
Creamegg11 · 26/05/2021 21:09

Thanks everyone. I’ve decided on the 5 year at 2.03%. It’ll be a gamble but being tied for 10 years on a BTL seems forever and early repayment fees scary.

My current 5 year is 2.79%, at the time I thought it was a great deal and would have never envisaged 5 years later, I will be offered 2.03%!

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