Whethyer To Fix Our Mortgage?

[Whatevs]

The million dollar question I know but hoping someone can give some pearls of wisdom? Should I fix for 2yrs at 2.34% or 5yrs at 3.49%? I keep hearing that interest rates are due to rise within the next few years so do I fix in now for the long term and hope it saves me money, OR have 2 really good years on a super low rate and hope whatever rate I go onto next is silimar to 3.49%

Arggggg - just don't know what to do?!

[woofgang]

how painful will it be for you to make the wrong choice? if you are up for a gamble, fix for two, if you really need to know you can afford your mortgage for the next five years and are secure in your home then fix for 5. i sm not a financial wizz and have no idea what mortgages will do. can you wait till after the autumn statement to decide?

[Whatevs]

We have got some room to move, but would struggle with a massive mistake!

Need to make a decision soon because it's for a new house we're about to buy.

Just checking out my paperwork from the bank and have seen that payments after the 2yr fixed time ends, would go up to a monthly amount HIGHER than we would be paying if we fixed for 5yrs, and that assumes the interest rates will stay the same. Surely it's a dead cert that they'll go up in the next few years?

Sorry I'm using you as a sounding board now!

[woofgang]

so in fact you are not fixing for two years but fixing for 2 years at a low rate then fixing for a further amount of time at a higher rate. How long is the second fix for?

[Whatevs]

It doesn't actually say - just says if interest rates stayed the same, after the 2 years you can expect to be paying £xx

[factor-fiction]

The 2 year fix would be cheaper provided the average rate you pay in years 3, 4 and 5 is not more than around 4.2%.
I think rates will probably increase by 1.5-2% by 2016, but it's difficult to predict what will happen by 2018. The people who set the rates for fixes probably know more than we do so it's probably not worth trying to out forecast them.
It depends really on what you can afford and what value you place on peace of mind.
I prefer a bird in the hand, so my own choice would be to get the best 2 year rate and then start looking for the best deal around as the end of that term approaches

[woofgang]

So the second fix isn't a fix? Its just an illustration of what you might expect to pay if you stay with them...so not "would go up to" but "are likely to go up to"

[ubasses]

The rate they are quoting at the end of 2 years is most likely to be the current variable rate which of course could be different in 2 years time. At that time if you do nothing that is what will happen. There is always the option of taking another fixed rate, whether that will be offered free of any fees or not you need to ask. While all emphasis is put on trying to second guess future rates, which rarely works, concentrate on how important it is to your budgeting, if you can afford the 5 year rate, and cannot afford easily anything higher it may be best to take that. The risk is missing a lower offer in 2 years.

[Whatevs]

factor-fiction - how did you work out that average, that's exactly the kind of thinking that will help, thank you. Personally I'm not a risk taker and would prefer to know what we'll be paying for 5 yrs (and not 2 yrs) but my husband isn't the same and I am def tempted by the super low rate for 2 yrs. Argg!

Woof gang - yes, just a 'likely to go up to' scenario. I think basses has to right, we'll go onto variable rate and what they're quoting is only an estimate.

God this is hard! I once got my fingers burnt by fixing for too long hence the over the top stressing!