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2 or 5 year Fixed Rate?

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Posted on 10 March 2011


I have 10 years left on a mortgage of £34000. Should I being opting for a 2 year fixed rate of 3.99% with no fees or looking at a 5 year fixed rate?

Kate,

Northern Rock and Woolwich are two of the Lenders with 3.99% 2 year Fixed rates with no fees, but neither of these make our Best Buys because there are better rates available. Now whether you should be opting for a 2 or 5 year Fixed depends on what you think will happen to interest rates and how much of a premium you are prepared to pay now for the peace of mind a fixed rate can bring.

At Charcol we believe that whilst interest rates will rise they will not do so quickly and that 5 year Fixed rates are currently overpriced. We also believe that 2 year Fixed rates are overpriced and it is unlikely that the Bank base rate will increase sufficiently to make these worthwhile. Of course forecasting rate movements is not an exact science and the next set of economic figures could change the whole outlook.

For this reason I believe you would benefit from talking to one of our consultants. They can conduct a full factfind and look at your whole situation, including your attitude to risk before making a personal recommendation.

Please call on 0844 346 3672 and tell the consultant the date and title of your question.

Peter

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Categories: Remortgaging, Fixed or Variable?


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Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

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Our charges are based on two considerations: the loan amount and the complexity of your individual circumstances. We will provide you with a free initial consultation and we will always explain exactly what you will be charged before you choose to  proceed with an application. As we offer a bespoke service our charges can vary. Our minimum fee is £495, (of which a non-refundable £150 is payable when you make a formal mortgage application). The average fee paid by our clients over the last year was 0.24% of their loan value. (For example, if your loan amount is £300,000 our average fee would be £720). If your circumstances are more complex we may charge a higher fee. Our maximum fee is 1.5% of the loan value. (For example, if your loan amount is £300,000, our maximum fee will be £4,500).

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John Charcol is a trading style of Towergate Financial (West) Ltd, which is authorised and regulated by the Financial Conduct Authority; our registration number is 147692.

John Charcol Associates LLP is an appointed representative of Towergate Financial (West) Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered office: Towergate House, Eclipse Park, Sittingbourne Road, Maidstone, Kent ME14 3EN. Registered in England No: 02292688.

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