Is it wise to fix for 5 years?

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brokeagain

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I am trying to decide whether to fix for 5 years or just go varible on new mortgage. There is a difference of 200 euro per month. There seems to be whispers in teh media that interest ratess could fall though so I am wary about fixing for so long.
Would I be better off to go variable an put the extra 200 against the principle every month?
I would appreciate all suggestions.
 
I fixed my mortgage for five years (2006- the present, at 4.85%) and I greatly regret doing so now. I missed out on the many reductions in interest rates that happened in the meantime. I made some small gains at the beginning of the term and again at the end but overall I did worse on the fixed rate that I would have done if I had stayed on the variable rate.

Be aware that when the banks set their fixed rates they are gambling (against you) on future changes in rates. However, they usually have a much better insight into future trends than their customers would have. For example, 4.85% seemed attractive in 2006 but two years later it did not. It's possible that at at that time the banks were able to predict a series of cuts in rates whereas I was not.

Also, if you fix, you are tied into the fixed rate by contract and if you want to break out of that fixed rate at any time you will be charged a penalty fee. This penalty fee usually makes it uneconomical to break the contract as they usually charge you roughly the amount that you would save by switching rates.

Five years is a long time to be on one interest rate without the option to switch, as I know to my cost. I would never fix again for longer than two years as anything can happen in the crazy world of mortgage interest rates.
 
when my mortgage began 5 years ago it was fixed for 2 years and we knew exactly what the repayments would be, so the certainty factor was important to us. we benefitted by changing to an ECB tracker rate and as the ECB has been low since then, it has been ok. There is no way of knowing if interest rates will rise by much in the future, if certainty is very important to you, then fixing for 5 years is the way to go. You just have to decide whether you want certainty of knowing exactly your next 60 monthly repayments versus staying variable and benefitting from potential lower rates or suffering potential rate rises. I personally wouldn't fix for 5 years and take the longterm view that the rates will fluctuate anyway over a 25-30 year period. I am not an expert on mortgage rates/banking etc.
 
We've just signed up for a 5 year fixed rate of 3.7%. We've just given up our tracker to sell our house but as we'd been overpaying for years, the combination of no longer overpaying + the new principle being lower (because of overpayments and getting a bigger house a mile up the road for same price), our repayments are going to be about €200 less than we had been paying. For us the certainty that we can afford those repayments was enough to convince us to go fixed along with the fact that that was the lowest rate we could get anywhere and was better than most variables.
 
Selling the house on the Tracker and buying another on the fixed rate is what I understand from f9710145's post, ClubMan.
 
Don't try and guess what will happen with future interest rates. Lots of people have opinions but no one really knows for sure.

Fix your mortgage only if you want to be certain of your monthy payments for the future. Otherwise say on the variable rate.
 
If, like me, you get stuck on a fixed rate that is higher than the variable rates that others are on, then you won't experience peace of mind. Instead you'll spend the time mentally torturing yourself as you watch your money disappear.
 
sorry if I wasn't clear clubman - ONQ has it, new mortgage is fixed for 5 years, old one was a tracker.
 
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