How long to fix mortgage for?

[Patrick Bateman]

Coming to the end of my 3 year fixed term on my first mortgage and I hadn't really been paying attention to rates so happily surprised to see how much cheaper the deals are.

Here's 3 comparisons, I'm paying £608 a month just now-



Given I don't know much about the market, what would you recommend? Are rates likely to not get any lower so worth going for the 5 year fixed? This was my initial thinking.

[nyt]

you can do better than that I think: http://www.moneysupermarket.com/mortgages/search/r...

Less than 2.5% for 5 years fixed is achievable.
Less than 2% for 3 or 4 years fixed

[Patrick Bateman]

Cheapest I can get on that is still £504 a month.

[ikarl]

Sarnie will hopefully be along shortly to give his advice, he sorted my mortgage recently (excellent service may I add!) and his advice for me was a fix 5yr deal.

We're incredibly happy with the product we have, but I guess it all depends on your circumstances? are you planning on staying in current property for a while etc..

[Patrick Bateman]

ikarl said:

Sarnie will hopefully be along shortly to give his advice, he sorted my mortgage recently (excellent service may I add!) and his advice for me was a fix 5yr deal.

We're incredibly happy with the product we have, but I guess it all depends on your circumstances? are you planning on staying in current property for a while etc..

Yes no plans to move at all. 5 years fixed is instinctively what I'm thinking but like I say, not my area of expertise so advice welcome.

[bogie]

Unless you are lucky with the market timing, then long term it can work out cheaper overall on SVR ....its not like the lenders are offering fixed rates to lose money, and the lenders have more intelligence about the future than you do

Ive fixed twice since my first mortgage in 1990 and both times would have been better off just leaving it variable (which is base+2% for my lender) ...so have for the last 10 years have indeed just left it alone and saved thousands/paid thousands extra off ....

You pay somewhere for the fix, and as always, those that can least afford the variance in payments end up paying the most overall to borrow the money.....

[Patrick Bateman]

bogie said:

Unless you are lucky with the market timing, then long term it can work out cheaper overall on SVR ....its not like the lenders are offering fixed rates to lose money, and the lenders have more intelligence about the future than you do

Ive fixed twice since my first mortgage in 1990 and both times would have been better off just leaving it variable (which is base+2% for my lender) ...so have for the last 10 years have indeed just left it alone and saved thousands/paid thousands extra off ....

You pay somewhere for the fix, and as always, those that can least afford the variance in payments end up paying the most overall to borrow the money.....

As a comparison then, going with the same place (Nationwide), I could get a 2 year tracker at 1.84% for £467.70 a month versus the 5 year fixed above (2.59%).

[C0ffin D0dger]

bogie said:

Unless you are lucky with the market timing, then long term it can work out cheaper overall on SVR ....its not like the lenders are offering fixed rates to lose money, and the lenders have more intelligence about the future than you do

Ive fixed twice since my first mortgage in 1990 and both times would have been better off just leaving it variable (which is base+2% for my lender) ...so have for the last 10 years have indeed just left it alone and saved thousands/paid thousands extra off ....

You pay somewhere for the fix, and as always, those that can least afford the variance in payments end up paying the most overall to borrow the money.....

Not so, if you want to go down that route then a tracker would give you better value. For example I'm on a lifetime tracker with HSBC at base + 1.5%. Generally speaking sticking with a lenders SVR is never a good idea unless you have to (i.e. change of circumstances means you can't get a better deal).

[Jockman]

C0ffin D0dger said:

Not so, if you want to go down that route then a tracker would give you better value. For example I'm on a lifetime tracker with HSBC at base + 1.5%. Generally speaking sticking with a lenders SVR is never a good idea unless you have to (i.e. change of circumstances means you can't get a better deal).

Furthermore the Lifetime Tracker is a variable product so there are no limits to overpayments, unlike on fixed products.

[bogie]

C0ffin D0dger said:

bogie said:

Unless you are lucky with the market timing, then long term it can work out cheaper overall on SVR ....its not like the lenders are offering fixed rates to lose money, and the lenders have more intelligence about the future than you do

Ive fixed twice since my first mortgage in 1990 and both times would have been better off just leaving it variable (which is base+2% for my lender) ...so have for the last 10 years have indeed just left it alone and saved thousands/paid thousands extra off ....

You pay somewhere for the fix, and as always, those that can least afford the variance in payments end up paying the most overall to borrow the money.....

Not so, if you want to go down that route then a tracker would give you better value. For example I'm on a lifetime tracker with HSBC at base + 1.5%. Generally speaking sticking with a lenders SVR is never a good idea unless you have to (i.e. change of circumstances means you can't get a better deal).

yes, sorry about my terminology, my mistake, im on lifetime tracker at base +2%, not SVR

if you sign up for a fixed deal, then it reverts to base + whatever, id stay with that rather than try to predict the market over 3-5 years ....ive never managed to get that right