Mortgages - how long would you fix for right now?

[CouldIBeAnymoreOuting]

People who are remortgaging over the next couple of months, how long are you fixing for?

Our offerings are 5yrs fixed at 4.54%, 2yrs at 4.7%, and 1yr at 4.9%

We were on a very low rate and our monthly repayment will be going up by £700-800. Not keen on paying that for 5 yrs, but if rates go up further our affordability will be very very tight.

The 1yr is tempting as feels relatively low risk if we can negotiate a new rate (possibly lower or at least similar to what we are being offered now) after only 6 months? …Unless rates drastically rise again within that 6 months.

A crystal ball would be handy!

That sounds like the best of both worlds. Which lender was that? I’ve only been offered trackers with no ERC

That was Coventry Building Society. Not sure if they still offer them. We were surprised when they mentioned them as there seems like there should be a catch. Slightly higher interest rate than some other products at the time but worth it for hedging our bets. Hope you find a reasonable solution - it’s so hard to try to predict what to do for the best.

Based on your product fee you mentioned I'd go with 1 year, and would avoid fixing for 5 unless I really needed to know my outgoings - eg things were really tight.

I would fix at 5 years. The global economic situation is too unstable to be sure that borrowing rates won't actually increase over that period. I'm probably in a minority though with that opinion.

Mine is up in 9 months. I am tempted to fix for 5 - my oldest will be going to uni 6 months later and I could do with some certainty over that point.

I'm also a single parent so only the one income.

Based on your numbers it seems you may have quite a large mortgage, over £400k perhaps?

In your situation, I'd wait and see what happens over the next few weeks. You may get a sub 4% fix for 5 years. I'd go for that. The economy and geopolitical situation is just too unstable to be taking risks on a large mortgage.

Things are really uncertain. Although there's a good likelihood rates will drop over the next year or so, you just never know what will happen. Its also perfectly feasible rates could increase again.

We've just bought and fixed for 5y at 4.4%. Admittedly, I'm currently pregnant and a SAHM, so we need the certainty in this stage of life when earning potential is limited. Fixing for 5y carries us through the years of a single income. I'll be annoyed if rates come down significantly, but I don't think it'll affect us too much and I'm quite risk averse at the moment as we have small margins in our budget. Our mortgage also allows for 20% overpayment each year, which feels like a safer and more reasonable strategy.

Let’s please ignore the Martin Lewis and other « informed » commentators opinion. The swap rates for 1,2 or 5 years are already pricing in all the info presently available (3 cuts this year, Ukraine, and Baileys snooze during meetings) so these are basically the consensus, or average punt on the level of interest rate over the period. Once it is clear that no one here and out here can reliably outsmart the market consensus, you need to focus on your own circumstance. The 5 year additional cost is your insurance for predictable outcome, if you can afford a higher amount and want to take a gamble, then go for shorter. If stability and visibility worth more to you, keep long. It really is impossible to know the future direction of interest rate, so that should come last in your decision making process

In case it’s useful to anyone on this thread, I read recently in Moneyfacts that the best current 5 year fixed deal for someone remortgaging with a good amount of equity is NatWest at 4.2%. There’s a high arrangement fee though - I think it was close to £1500.

Won't be available to everyone. My advice to anyone remortgaging is to go via a broker because if rates reduce before your rate is up they can, and will, switch you.

I know it wont be available to everyone that’s why I said people would need a good amount of equity - think it’s 60% LTV.

Yep, mortgage is in the low 500s. We've got until end of May so I can look again at the beginning of May. Just want to have something locked in for now just in case.

We are either going to go on the tracker for 2 years or a fixed.

It’s only a small part of our mortgage that ends shortly. We expect rates to get a bit better so might suck up the tracker for a few months and then move on to a 2 year fixed as we can exit the tracker to a fixed at any time without fees.

I was thinking lending criteria as well, and I wasn't trying to be difficult just advising in case anyone was going to do their mortgage themselves.

Ok but people can get mortgages themselves they don’t have to go through a broker and people with straightforward circumstances often don’t bother.

Lenders will provide further details of their lending criteria if anything isn’t clear from the information on their websites.

We are 40% LTV but can only product transfer with the same lender (I wouldn’t get the same affordability with a different lender as I dropped to part time and we also have childcare that we didn’t have when we applied originally).
DD starts school this year though so after the next fixed ends we can shop around more again as outgoings will reduce and I can increase hours again potentially.

In our case we are better off with the higher rate but £0 fee options as the fee is greater than the difference in payments over the term.

We have options from 4.59% - 5.05% (fixed) and the tracker is currently 6.18% but the plan would be to jump to a fixed as soon as it gets nearer to 4%.

The main part of our mortgage fixed last year for 5 years at 4.05% which we are ok with.

Brokers can get better rates though. For example the rates my broker can get with Natwest (our lender) are lower than the ones you can get yourself on the website. It’s only marginal but it’s enough of a difference eg for the same mortgage product the difference is 4.89% online, 4.59% with the intermediary.

Brokers can’t always get better rates and some lenders don’t use brokers. I’ve nothing against brokers btw and agree they can sometimes get better rates and are good for people in slightly complicated situations ( like self employed, for example) or first time buyers that might want extra support.

Just wanted to point out that you don’t have to use a broker & we sometimes haven’t as have found good deals doing our own research.

@CouldIBeAnymoreOuting

Firstly I would check out the 10 year fix without ERC.

But from your original details I'd go with the 2 year fix. It's a good length of time to see how things are going in the market & a bit of stability, but also not a very long time on a higher rate if they do drop.

i went through this last year & fixed for 5 in the end, but a lot of things were different at the time. I fixed at 2.48, so still very happy with my decision, but if I had to decide now I'd go for 2.

so many personal variables though, so in the end all you can do is make the best decision you can right now (well in May anyway).