Fixed mortgages.

5
Found 13th Aug 2017
I'm am thinking of changing mortgage to first direct fixed deal.
Currently pay 377 a month.
Five year fix would cost 367 a month.
Ten year fix would cost 388 a month.
Is it best to fix for longer or risk paying less and getting a new deal in 5 years time?
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I can only speak for myself, but it looks like you hae such a small mortgage (wish I only had to pay £380!) I would probably go for a 5 year fix, as if the interest rate did go up its not going to make it a high payment to pay.. Although again it's hard to say without knowing more info ie your salary, existing outgoings etc.
There is talk of interest rates having to go up due to rising inflation. I would choose the 5 years and see what happens after that. If you dont want risk or cant afford a lot then the 10 years will give you assurance. Although interest rates will inevitably rise within the next 10 years, they are unlikely to increase rapidly as the bank of england tries to keep it down
In your position I would go for the 10 year deal. You get peace of mind against rate rises. Taking a new deal after 5 years will typically cost you product fees (typically around £1000 mark) which you will avoid with a longer deal. That would pretty much compensate for the extra you are paying each month.
That is the question only you can make a decision on.
I went for a ten year deal just before Brexit - not really knowing what was going to happen.
It was a good deal at the time, but obviously now the rates are even better, so turned out to be not such a good idea.

You don't really know what will happen in five years, most likely the rates will be higher - but by how much? They can't go down much further.
But as Astreix says - you don't have to worry about any extra fees that may arise from re-negotiating a new deal and you also wont have to worry about spending time and money searching for a new deal for a lot longer.
astreix4 h, 48 m ago

In your position I would go for the 10 year deal. You get peace of mind …In your position I would go for the 10 year deal. You get peace of mind against rate rises. Taking a new deal after 5 years will typically cost you product fees (typically around £1000 mark) which you will avoid with a longer deal. That would pretty much compensate for the extra you are paying each month.


The extra payments on the 10 year deal (extra £21 per month) would equate to £1260 over 5 years.

So you could save a potential fee in 5 years, but you're still paying for the privilege. Which you go for would depend on your long term view of where interest rates will be, and your capacity to withstand rate rises.

Personally I went for the 5 year fix. Hopefully I'll be able to pay off most of my remaining mortgage in that time. If I couldn't, I might have gone for the 10 year - just be aware you're paying an "extra" £252 per year.
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