2 year or 5 year fixed?

[Polarsimilarities]

Exactly that really. We've just had our mortgage offers through and our options are:

5 year fixed at 5.29% or 2 year fixed at 5.59%, both for a £110k mortgage on a house we're buying for 210k. We have no idea what to do as neither of us understand mortgage/financial lingo well enough to make an educated decision. The monthly payment difference is only £30.

I think 5 year as it tells us exactly what our payments will be for 5 years - I'm currently a sahm so means we won't have to remortgage again under 1 income as I'll be back at work in 5 years.

Can you afford the 2 year one, as the 5 year one is less it may mean that rates will come down a bit within the 5 years so if you went with 2 years may be able to get a lower rate after.

if you want security go for the 5 year though?

If personally go with the 5 year rate. Especially as a sahm

We’ve just settled our next fixed rate today and gone with two year. Think our rates are slightly lower than yours, but we’ve just got ten years left and been with them forever it feels like! We didn’t want to tie in for 5 years as feel it’s likely to come down but who knows.

At those rates I'd probably go 2 year, I'm not a fan on 5 year fixes but I've gone for one this time as rate was 3.93.

Even if rates come down over the next 2/3 years I doubt they'll dip much below 3.5-4% and very unlikely we'll ever get the 1-2% we've been used to.

I had this dilemma a month ago. I went back and forth in my head until I annoyed myself 🤣

I ended up going for 5 year fix. I based my decision on wanting the comfort of knowing exactly what my payment is going to be and no possible arrangement fees for a while. Also, in the hope that I would be in a more comfortable position to maybe make some small overpayments here and there as finances allow.

May well end up kicking myself, but at the moment I’m very happy with knowing where I stand for the foreseeable.

Is there an option for 3 years? We used to do 2 years and it felt like we were constantly remortgaging!

Last one was for 3 years and it felt like the right duration.

5 year

What are the early repayment charges on each? Can you port if you decide you want to move house?

if you don’t think you are going to move I’d say 5 years and overpay as much as possible

We just fixed for 5 years at 4.18. 2 years felt too short!

Do most people think the rates will go down in 2 years time thats why fixing for 5 years isn't wise? Just curious.

What are you plans OP? You need to think bigger picture than just the rates themselves.

Are you thinking of moving, getting a bigger house, a particular school catchment area, closer to family? If you think you might move house in the next couple of years then go for the 2 year fix to give you flexibility. Often mortgages can be ported so it doesn't necessarily stop you but they can and do have restrictions.

If you are settled, planning to stay put in that house and want certainty of monthly payments then go for the 5 year. Especially if potentially you won't be back at work in 2 years (you might plan to but things don't always go to plan).

The above isn't exhaustive but more just to get you thinking about your own life and plans.

To the above poster who asked about rates coming down...the general feeling is that in 2 years time the rates will have come down, but not massively. I doubt there'll be anywhere near as low as we are used to, maybe more 3-4%. But actually
who knows. The war in Ukraine continues, inflation is still high and these things take time to turn around. We're in a very different economy just now and with a general election between now and the OPs next renewal there could be other fiscal changes which may impact their household.