How long to fix for?
Discussion
Hi all, after some advice. Hopefully this is the right place!
I'm 28 just about to buy my first place. I can't decide whether to fix for 2 years or 5. The difference is £60, I know it's not that much but I'm doing it on my own so that money would be handy for other bills etc. I could stretch for the extra though if it's likely to be worth it. The 2 year interest is 1.74% and the 5 is 2.9%. I know nobody knows what is going to happen in the future but just wondered what you would do? I don't intend to move out within the 5 years but who knows what may happen.
Thanks in advance!
I'm 28 just about to buy my first place. I can't decide whether to fix for 2 years or 5. The difference is £60, I know it's not that much but I'm doing it on my own so that money would be handy for other bills etc. I could stretch for the extra though if it's likely to be worth it. The 2 year interest is 1.74% and the 5 is 2.9%. I know nobody knows what is going to happen in the future but just wondered what you would do? I don't intend to move out within the 5 years but who knows what may happen.
Thanks in advance!
On that note, I'm fixed until Sept 2017. The early redemption fee is a grand, but I have the money to pay off the mortgage.
Can't work out if I'm better off paying off the mortgage plus a grand now or just continuing to pay the monthly amount until I can get out of the mortgage penalty free.
Can't work out if I'm better off paying off the mortgage plus a grand now or just continuing to pay the monthly amount until I can get out of the mortgage penalty free.
Thanks for all the replies. I was leaning towards the 5 year anyway, mainly for the security of knowing what I'm paying. Think this has confirmed it. I don't see me moving within that time anyway.
Another quick question... The mortgage proposal I have has protection for serious illness etc added on top which is £30 a month. Is this something I have to take? Could I shop around and get this at a later date? I'm new to all of this!
Another quick question... The mortgage proposal I have has protection for serious illness etc added on top which is £30 a month. Is this something I have to take? Could I shop around and get this at a later date? I'm new to all of this!
My very strong advice unless you are at the edge of your affordability envelope is to go for the two year fix. If the banks are offering you five years at x you can bet strong money on it they won't be losing out on that deal.
I've done alright out of property the last few years but I had to take the decision to buy my way out of a three year fix at year one back in 2012 when rates fell off a cliff. It was the right thing to do but it was painful to say the least.
Take the shorter fix , keep things liquid,many overpay the saving each month.
I've done alright out of property the last few years but I had to take the decision to buy my way out of a three year fix at year one back in 2012 when rates fell off a cliff. It was the right thing to do but it was painful to say the least.
Take the shorter fix , keep things liquid,many overpay the saving each month.
I believe forcing you to take CI/IP cover isn't legal, but I'm not 100%. But yes those policies can be put in place whenever you want.
Fixing for 2 years at the moment doesn't make much sense, you'll just need to pay another arrangement fee 2 years down the line and interest rates are looking more like going down than up. I would suggest 5 years is a good term if you can get a decent rate and can't tolerate a rate rise. 2 years really doesn't give you much in the way of protection against this. If you can't get a good 5 year rate, seriously consider some sort of lifetime tracker/variable. These products typically have no early repayment charges so you can jump ship whenever (rates look like/start rising), but if they don't as in the last 7-8 years you're laughing.
Fixing for 2 years at the moment doesn't make much sense, you'll just need to pay another arrangement fee 2 years down the line and interest rates are looking more like going down than up. I would suggest 5 years is a good term if you can get a decent rate and can't tolerate a rate rise. 2 years really doesn't give you much in the way of protection against this. If you can't get a good 5 year rate, seriously consider some sort of lifetime tracker/variable. These products typically have no early repayment charges so you can jump ship whenever (rates look like/start rising), but if they don't as in the last 7-8 years you're laughing.
Edited by rsbmw on Tuesday 26th July 08:48
ThrottleBod said:
Hi all, after some advice. Hopefully this is the right place!
I'm 28 just about to buy my first place. I can't decide whether to fix for 2 years or 5. The difference is £60, I know it's not that much but I'm doing it on my own so that money would be handy for other bills etc. I could stretch for the extra though if it's likely to be worth it. The 2 year interest is 1.74% and the 5 is 2.9%. I know nobody knows what is going to happen in the future but just wondered what you would do? I don't intend to move out within the 5 years but who knows what may happen.
Thanks in advance!
I'm in a similar position (albeit not a first time buyer). I'd suggest going for the 2 year fix and either put the extra £60/month away or better still overpay your mortgage by £60/month. I can't imagine interest rates rising just as we leave the EU in 2 years' time but that's just gut feeling rather than being based on anything specific.I'm 28 just about to buy my first place. I can't decide whether to fix for 2 years or 5. The difference is £60, I know it's not that much but I'm doing it on my own so that money would be handy for other bills etc. I could stretch for the extra though if it's likely to be worth it. The 2 year interest is 1.74% and the 5 is 2.9%. I know nobody knows what is going to happen in the future but just wondered what you would do? I don't intend to move out within the 5 years but who knows what may happen.
Thanks in advance!
2 year fix is IMO completely pointless unless you're really struggling with the monthly repayments right from the outset - in which case you probably don't want to pay for the fix in any event. Just stick the cash saved in a jar on the mantelpiece to cover possible rate increases during the 2 years. Rates have been on the floor since 2008, BoE is talking about possible further reduction (!) so IMO the chances of material increases within a 2 year time-frame are not the sort of thing to keep you awake at night.
Even 5 years is a pretty short fix IMO. At 10 it starts to make sense.
Fixing is essentially paying an insurance premium. Do you really need that insurance?
As ever, opinions will differ....
Even 5 years is a pretty short fix IMO. At 10 it starts to make sense.
Fixing is essentially paying an insurance premium. Do you really need that insurance?
As ever, opinions will differ....
HOGEPH said:
On that note, I'm fixed until Sept 2017. The early redemption fee is a grand, but I have the money to pay off the mortgage.
Can't work out if I'm better off paying off the mortgage plus a grand now or just continuing to pay the monthly amount until I can get out of the mortgage penalty free.
i am in similar position stuck on svr till 30/8/18 but 3% early penalty charge so stuck until then-very annoying as good deal at time but obviously future could not be predicted and rare to get early penalty charge lasting 10yrs....Can't work out if I'm better off paying off the mortgage plus a grand now or just continuing to pay the monthly amount until I can get out of the mortgage penalty free.
i would fix for 5 years myself
Are you sure you can't get better than 2.9% for a 5yr fix? 2.9 is still good.
I just fixed for 5 years having just come off a 5yr fix. Missed out on having a tracker but even looking back the insurance of a fix was worth it.
Looking forward from now, I think Brexit introduces a level of uncertainty that weighted against the difference between tracker and fix rates a fix is a no brainer IMO.
You can usually move with a fix BTW, it's called porting.
I just fixed for 5 years having just come off a 5yr fix. Missed out on having a tracker but even looking back the insurance of a fix was worth it.
Looking forward from now, I think Brexit introduces a level of uncertainty that weighted against the difference between tracker and fix rates a fix is a no brainer IMO.
You can usually move with a fix BTW, it's called porting.
A lot can happen in 5 years. Make sure you compare the early repayment charges on different 5 year loans, so you know what you're getting into. Most people don't think about that until they find themselves in a position where they have to pay them.
I was stuck on 5 years at 4.69% because I'd have had a £4k repayment fee to get out of it onto a cheaper rate.
I was stuck on 5 years at 4.69% because I'd have had a £4k repayment fee to get out of it onto a cheaper rate.
HOGEPH said:
On that note, I'm fixed until Sept 2017. The early redemption fee is a grand, but I have the money to pay off the mortgage.
Can't work out if I'm better off paying off the mortgage plus a grand now or just continuing to pay the monthly amount until I can get out of the mortgage penalty free.
It's pretty straight forward - work out what you'd pay between now and September 2017 and then redeem the mortgage.Can't work out if I'm better off paying off the mortgage plus a grand now or just continuing to pay the monthly amount until I can get out of the mortgage penalty free.
Work out what you'd pay in total if you redeem now.
Which is the cheapest route?
bmwmike said:
Are you sure you can't get better than 2.9% for a 5yr fix? 2.9 is still good.
I just fixed for 5 years having just come off a 5yr fix. Missed out on having a tracker but even looking back the insurance of a fix was worth it.
Looking forward from now, I think Brexit introduces a level of uncertainty that weighted against the difference between tracker and fix rates a fix is a no brainer IMO.
You can usually move with a fix BTW, it's called porting.
I'm looking at 2.79% fixed for 10 years and £999 fee Barclays/WoolwichI just fixed for 5 years having just come off a 5yr fix. Missed out on having a tracker but even looking back the insurance of a fix was worth it.
Looking forward from now, I think Brexit introduces a level of uncertainty that weighted against the difference between tracker and fix rates a fix is a no brainer IMO.
You can usually move with a fix BTW, it's called porting.
Welshbeef said:
I'm looking at 2.79% fixed for 10 years and £999 fee Barclays/Woolwich
Nice. I looked at that but got 1.99% for 5y with HSBC instead. At that rate it's CRAZY not to buy 50k of BAE and get 5% div yield tax free!
(I am not a financial advisor do at your own risk and this may be a joke etc)
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