Mortgage 2yr vs 5yr with overpayments
Discussion
I'll keep this simple. Soon to be moving house and need to decide between a 2yr and a 5yr fixed rate mortgage as below:
Mortgage Amount: £277,500
Term: 18 years
2yr Fixed @ 1.64% = £1484pm
5yr Fixed @ 2.24% = £1562pm
Say I have the ability to over pay up to £1600 a month, I am obviously paying off more of the capital initially on the 2yr deal, but subject to a rate rise in year 3 rather than year 6.
I know no-one has a crystal ball but what would you do? The above mortgages are without any fees on a property of £425k so if anyone knows of a vastly better deal I'm all ears. Will be seeing an FA later this week...
Mortgage Amount: £277,500
Term: 18 years
2yr Fixed @ 1.64% = £1484pm
5yr Fixed @ 2.24% = £1562pm
Say I have the ability to over pay up to £1600 a month, I am obviously paying off more of the capital initially on the 2yr deal, but subject to a rate rise in year 3 rather than year 6.
I know no-one has a crystal ball but what would you do? The above mortgages are without any fees on a property of £425k so if anyone knows of a vastly better deal I'm all ears. Will be seeing an FA later this week...
By my maths, if you went for the 60 month deal, at month 24 you'd have paid about £1800 extra in repayments and also be about £1400 down on the capital balance so ~£3200 in total.
With this in mind you need to make a call. My view is that 2.24% is still very good and worth it for peace of mind. I fixed for 60 months at a similar rate but my balance is much lower.
With this in mind you need to make a call. My view is that 2.24% is still very good and worth it for peace of mind. I fixed for 60 months at a similar rate but my balance is much lower.
wiggy001 said:
I'll keep this simple. Soon to be moving house and need to decide between a 2yr and a 5yr fixed rate mortgage as below:
Mortgage Amount: £277,500
Term: 18 years
2yr Fixed @ 1.64% = £1484pm
5yr Fixed @ 2.24% = £1562pm
Say I have the ability to over pay up to £1600 a month, I am obviously paying off more of the capital initially on the 2yr deal, but subject to a rate rise in year 3 rather than year 6.
I know no-one has a crystal ball but what would you do? The above mortgages are without any fees on a property of £425k so if anyone knows of a vastly better deal I'm all ears. Will be seeing an FA later this week...
They look like Nationwide retention products to me? There are cheaper products elsewhere but not "vastly"............rates are so low at the moment that the market is compressed tightly meaning the spread of products across lenders is very small......good luck!Mortgage Amount: £277,500
Term: 18 years
2yr Fixed @ 1.64% = £1484pm
5yr Fixed @ 2.24% = £1562pm
Say I have the ability to over pay up to £1600 a month, I am obviously paying off more of the capital initially on the 2yr deal, but subject to a rate rise in year 3 rather than year 6.
I know no-one has a crystal ball but what would you do? The above mortgages are without any fees on a property of £425k so if anyone knows of a vastly better deal I'm all ears. Will be seeing an FA later this week...
CaptainSlow said:
By my maths, if you went for the 60 month deal, at month 24 you'd have paid about £1800 extra in repayments and also be about £1400 down on the capital balance so ~£3200 in total.
With this in mind you need to make a call. My view is that 2.24% is still very good and worth it for peace of mind. I fixed for 60 months at a similar rate but my balance is much lower.
Thanks for this, as it confirms my maths are correct. With this in mind you need to make a call. My view is that 2.24% is still very good and worth it for peace of mind. I fixed for 60 months at a similar rate but my balance is much lower.
My maths also suggest that if I were to take the 1.64% deal for 2 years, I'd have to jump to about 2.76% for the remaining 3 years to be in the same position assuming no fees, or 2.53% with £1500 fees.
Food for thought.
Sarnie said:
They look like Nationwide retention products to me? There are cheaper products elsewhere but not "vastly"............rates are so low at the moment that the market is compressed tightly meaning the spread of products across lenders is very small......good luck!
Correct, and thanks for confirming that I wouldn't necessarily get much better elsewhere. We are with them at the moment and had a deal lined up for the new property which is likely to expire before we complete (it's been a long process!). NW turned the valuation around very quickly so I'm happy to stay with them and not delay things any further unless there is a compelling reason to move. Looking on comparison sites suggests I wouldn't get much saving from moving lender so I'm happy to stay with them.
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