Should I remortgage at a 2 or 5 year fixed interest rate?

Posted on 8 January 2008

My fixed rate mortgage stops at the end of March. I want to find the cheapest interest rate. Which is better a 2 or 5 year? Is the interest rate going up or down?

Hi John,
 
Yes you certainly need to apply for your remortgage now if you are to be ready in time for March. You need to spend half an hour speaking to a mortgage broker to discuss your personal situation and preferences.  The actual pay-rates for two and five year fixes are broadly the same at the moment, so if you're undecided about the term of your deal, you need to consider whether you can be tied into a deal for five years at the moment, how you would feel if rates fell but yours stayed the same, and that if you have to move, porting fixed rates to another property is subject to you basically re-applying again, meaning that if your employment has changed at the time you could be refused and may have to pay the Early Repayment Charge.  The pros are that you secure a rate that will stay the same regardless of whether the Base rate flies up, and that you won't pay any more remortgaging fees for five years.
 
I have no crystal ball either i'm afraid, but the industry opinion on Bank rate is that it will fall again soon (this month's decision is tomorrow), and may even go as low as 4.5% this year, so tracker mortgages have been popular.
 
If you would like to speak to a John Charcol adviser, they can be reached on 0845 034 2199. www.charcol.co.uk John Charcol no longer charges an advice fee.

Categories: Current rates & the market, Fixed or Variable?, Remortgaging

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