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Original poster

New mortgage 5 or 10 year term

58 replies

Vivi0120 · 03/02/2023 14:48

So we are remortgaging at the moment and our % is doubling which is a huge shock but now I'm wondering whether to go 5 or 10 years I don't want to be in this position in another 5 years but what if percentages go down? The new mortgage is at 4% ... is it stupid to go for 10 years having in mind the penalty to repay early I 6% for the 1st 5 years?

We are not planning to sell but also the mortgage is transferable.

What do you guys think?

OP posts:
SparkleSpangle · 03/02/2023 21:54

We fixed for 5 years a couple of years ago we should have gone for 10. Now I'd go for 5 and hope it goes down.

sunseaandme · 03/02/2023 22:08

I work in the mortgage industry and I think it's very unlikely the interest rates will continue to go
Up. I'd go for 5 year and hopefully you'll have a pleasant surprise and they will go down quite a bit by then. Have a chat with a mortgage advisor

Temporaryname158 · 03/02/2023 22:09

I fixed for 10 years. I feel comfortable knowing I won’t be reassessed for affordability now prices are increasing and I have taken the punt that they won’t decrease as low as they have been recently as that in itself was out of character…..praying I’ve made the right choice!

Carolinethea · 03/02/2023 22:24

The newspaper money section articles plus forecasts I have read seem to suggest that interest rates will peak in the summer this year and then remain the same or reduce slightly as inflation isnt thought to be such a major issue. As a result I think we will be going for a 2 year fix when ours comes up for renewal in the summer.

superdupernova · 03/02/2023 22:38

We're buying and going for a 2 year fix. Our mortgage broker is fairly confident that rates won't continue as they are but obviously said that in the confidence that we aren't stretching ourselves and could pay should the worst happen.

Panicatadisco · 03/02/2023 22:44

@sunseaandme we are looking at moving and will need to get a mortgage of £300k just to trade up with to more expensive area and possibly the same again to renovate. Is there a product that allows you to draw down the loan in two chunks when you need it that isn’t an offset? We love offsets but think the rates of those are too high right now… DH is against paying for the whole 600k debt now when it could be almost a year before building work starts and rates by then could be a bit lower. I on the other hand want to borrow the lot now because if banks tighten their criteria or he loses his job due to a massive recession then we won’t be able to borrow to renovate.

FabbyDab · 04/02/2023 06:17

I think it depends on your own personal circumstances. Could you still pay your mortgage if in 5 years time they were 5/6/7%? What have you planned for the next 5-10 yrs? Starting/stopping paying childcare fees? Maternity leaves? Going part time or increasing hours? Retraining? Etc

Twiglets1 · 04/02/2023 06:35

Fixed term mortgage interest rates are already coming down compared to their peak in 2022.
Im not sure I would want to fix at the current rate but if I did it would only be for 2 years.
10 years is way too long in my opinion.

Wheretheskyisblue · 04/02/2023 06:49

I would be going for a variable at the moment as rates have peaked or are close. These are about 3.55% for discounted.

abyssofwoah · 04/02/2023 07:09

We had mortgage advice very recently and the advisor was saying that 5 year fixes are currently cheaper than 2 year, and inferred that mortgage companies are expecting rates to come down during that time so want people tied in to that 5 year rate.

We will be going for a 2 year fix this time, but it depends on your own circumstances really. I wouldn’t choose this moment for a 10 year fix personally though.

butterflycatcher · 04/02/2023 07:11

I think the Bank of England's latest report indicates further interest rate rises to 4.5% by the summer. Things will then remain stable for some time before starting to slowly fall to a rate of around 3.25% by 2026. You've obviously got to take with a pinch of salt as external factors can heavily influence these predictions. Plus there is some concern over inflation becoming more embedded in the UK because of wage inflation (everyone asking for pay rises to match inflation) and increased service industry costs as a result, rather than the current pressures of energy prices. If you value certainty in your budget then go 5 years. If are happy to take a risk go shorter.

WestBridgewater · 04/02/2023 07:11

When we did a 10 year rate many years ago the reason we opted for it was we knew that the repayments were affordable, we weren’t planning on moving and the fees to book the fixed rate had gone up considerably, the fee was the same for both terms and I begrudged having to pay to book another rate in five years. I never watched the rate because I was happy with the repayments and knew we could afford them. I don’t trust mortgage advisors, most of them will advise the shorter term as they’re hoping for your return business in 5 years and they have no idea what will happen to rates the same as the rest of us.

TheFairyCaravan · 04/02/2023 07:17

We did a 10yr fix last Spring when we bought our house. It’s a 12yr term but we intend to have it paid off before the 10yr fix ends. Our mortgage advisor, at the time, said he wouldn’t do anything less than a 5yr fix if it was him.

We went with the 10 because we wanted to know exactly how much we were going to have to budget for each month. We’re glad we did after the way interest rates have risen.

IheartNiles · 04/02/2023 07:39

No way would I fix at the moment. Unlike the US we have no growth predicted in the economy, so once the external inflation settles later this year the rates should start to come down. I would get a tracker then fix once the rates fall and plateau.

Isyesterdaytomorrowtoday · 04/02/2023 07:42

i regret not taking the 10year (at about 2%) when we last fixed for 5year. If I was renewing now though I think I’d go for 2yr fix or stick variable if you can handle a bit of variation for 6-9months. Everything I’ve read suggests better next year. I definitely wouldn’t tie in for 10.

Isyesterdaytomorrowtoday · 04/02/2023 07:43

@TheFairyCaravan that was in a very different market though- a 10yr fix last spring is a whole lot different to one now

PurBal · 04/02/2023 07:47

10yr - never, too many variables in life, it would stress me out
5yr - maybe, especially if you need to know your outgoings (we have 2 children who will be in nursery, neither with free hours, next year).
3yr - this is what we went for a few months ago based on advice from our broker who anticipates a small recession with rates levelling to about 3-4% next year.
What has your broker advised?

PurBal · 04/02/2023 07:49

I meant 2yr.

LeatherSoledShoes · 04/02/2023 07:51

I’ve fixed for five years this week at just over 4%.

Rates won’t drop back to the lows of recent years but are expected to settle at 4% or slightly less in the longer term.

Twiglets1 · 04/02/2023 08:15

WestBridgewater · 04/02/2023 07:11

When we did a 10 year rate many years ago the reason we opted for it was we knew that the repayments were affordable, we weren’t planning on moving and the fees to book the fixed rate had gone up considerably, the fee was the same for both terms and I begrudged having to pay to book another rate in five years. I never watched the rate because I was happy with the repayments and knew we could afford them. I don’t trust mortgage advisors, most of them will advise the shorter term as they’re hoping for your return business in 5 years and they have no idea what will happen to rates the same as the rest of us.

You probably never watched the rate because it would have broken your heart to do so, if you fixed into a 10 year rate years ago.
You plainly made a mistake to book into such a long term rate yet are advising someone else to do the same thing? If you can’t be bothered to look at rates fair enough, but you’re probably not the right person to them give people advice on mortgage rate decisions.

Temporaryname158 · 04/02/2023 08:50

I think what PP was saying though is look at what you can afford and does it suit you. Some people are willing to pay more for stability and she may have fixed for 10 years at a low percentage. We don’t know!

I got my 10 year fixed for 3.6% and I am currently happy with that as due to various circumstances this suits me to be fixed for that long.

Twiglets1 · 04/02/2023 09:36

Temporaryname158 · 04/02/2023 08:50

I think what PP was saying though is look at what you can afford and does it suit you. Some people are willing to pay more for stability and she may have fixed for 10 years at a low percentage. We don’t know!

I got my 10 year fixed for 3.6% and I am currently happy with that as due to various circumstances this suits me to be fixed for that long.

But you do know rates have been at an all time low over the last few years? A lower rate than you could have got 10 years ago.
It’s fine if someone wants to pay more than they need to for stability but it’s not the most intelligent choice, so probably best not to advise others to do the same thing especially at a time when fixed term mortgage rates are falling and predicted to fall further.

FurierTransform · 04/02/2023 09:59

I'd be wary of a 10 year fix anytime. That's a very long time for your circumstances to change, and if you do need to exit early the ERC will be significant.

maddy68 · 04/02/2023 10:00

I would speak to an IFA

nca89 · 04/02/2023 10:04

I wouldn't fix for 10 years now, I've always been a 5 year fixer but I don't think I'd even do that now, well maybe I would if fixing today, but when our mortgage is due in 18 months I'm thinking it's likely we will do a shorter term fix.