2 or 5 year fix - help!

[Bonnie1525]

My head is spinning at the moment - any advice appreciated.

Our 2 year fix (which was on a very low rate) finished at the end of last month/Dec. Rates were coming down just before we signed up to a new 2 year fix with our current lender, so we decided to flip over to SVR whilst we secured a more competitive deal. That turned out to be a good move because our current lender is now offering us a 2 year fix that is over £100 a month cheaper than their offer last month (Last month £1329, this month £1209) . If we switch providers we can save a little more still. A 5 year fix for us now is around £1190. We will need to sell at some point, as this is not our forever family home. I am not sure we will be ready to sell in 2 years time but I can't see us still being here in 5. I think I am panicking because we are kicking ourselves that we did not fix for 5 years when we bought the house 2 years ago.

Whether it be 2 or 5 years, is now the time to fix again? Or should we stomach another month of SVR?

we are currently in the process of remortgaging and have taken a two year fix.

how much are you repaying on SVR? How does it compare to the fixed rate payments?

how comfortable are you with risk/ uncertainty?

What’s your LTV? are you in danger of changing LTV bands if house prices change?

The current SVR repayment is about £400 a month more than the new rate they are offering us now.

I would say we are no particularly comfortable with risk.

We are almost at 60% LTV.

I’d do the 2 year fix particularly if you’re planning to move. When we moved last we were stuck in a fix which meant we couldn’t break the chain when we’d sold and not found our next house without large exit penalties. The 2 year will give you more flexibility and predictions are that rates will fall over the next couple of years.

Fix it now to one or the other, I think mortgage rates are going to start ticking up again.

Two year if you have to do it at the moment. We won't fix until they drop to 4.5

I would probably wait to see what happens with the Bank of England base rate at their next meeting on February 1st. If it goes down then mortgage rates probably will too. If it stays the same I would consider a 2 year fix or a tracker mortgage. interest rates are generally expected to reduce over the course of 2024 & 25 but a fixed rate of course removes any uncertainty.

I wouldn’t go for 5 years due to interest rates being expected to fall but also because you plan to move before then and don’t want to have to pay penalties.

Just wanted to add @Bonnie1525 that current thinking seems to be that the bank base rate is likely to be cut for the first time around May/June time rather than earlier so probably doubtful anything will change at the Feb 1st meeting.

https://www.bbc.co.uk/news/business-67993276

Thank you all

We have managed to secure a 2 year at 4.65% so plan to proceed with that and make as many overpayments as we can managed over the next 2 years.

manage*

Good move. This video probably vindicates that move.

That sounds like an excellent deal.

Well done, sounds good.