Mortgage: 3.5% (5 year fixed) or 4.1% (10 year)?

[rivensoul]

I am planning to buy a flat and I can take a 30-year mortgage at either 3.5% pa fixed for 5 years or at 4.1% pa fixed for 10 years. If I take the higher interest rate, the difference in absolute terms over the 5-year period would be around 9,500€ (i.e. what I'd pay extra over taking the lower interest rate).

I am tempted to take the longer fixation term as I think that's a relatively low price for an extra bit of security and while of course it sucks to pay more in monthly installments, I should be able to manage.

The price for paying the mortgage off early (when refinancing) is only up to 2,000€, so that shouldn't be an issue at any point.

What would you do?

View Poll

 

[synthman]

@rivensoul What you are basically asking is: Will interest rates be higher than 4.1% 5 years from now. It's anyone's guess if we are honest.

 

[rivensoul]

@synthman Pretty much, but not only I guess I am also asking about whether people think that .6 percentage point (or 9.5k euros) difference is a reasonable price for more security

 

[taizy]

@rivensoul If you value security and less stress, then go for the higher rate!

If you think taking a (reasonable) gamble is worth it, and the extra pennies adding up won't make or break you, then take the shorter and cheaper rate and find out what happens!

They're both reasonable choices, it just depends what you value more.

 

[lauriestair]

@synthman Interest rates will be higher than 4.1% within 2 years mate.

 

[synthman]

@lauriestair Yes, but they could very easily be lower again by 5 years.

 

[lauriestair]

@synthman Highly unlikely. The chances for that is close to 0.

 

[synthman]

@lauriestair RemindMe! 5 years

 

[zemanel]

@synthman

Pretty much, but not only I guess I am also asking about whether people think that .6 percentage point (or 9.5k euros) difference is a reasonable price for more security

My best guess is that the interest will shoot up into the stratosphere to kill inflation. But as we are at the end of the current debt cycle at some point we need to start stimulate the economy again. There might be a couple of years until this happens though so I guess its a question of having enough margins to pay those higher interest rates for a couple of years.

 

[adthrive]

@rivensoul 50% 50% as per the vote. We aint helping you at all

 

[willumg]

@adthrive Yes/no you should/shouldn't choose A/B

 

[rivensoul]

@willumg Wait what do you mean?

 

[stephonydburghduff]

@rivensoul I'd take the longer fixed period. I personally doubt you'll have better conditions than 4.1% in 5 years time.

I went with 20 year fixed 10 months ago myself (at 1.75)

 

[free2bealways]

@stephonydburghduff Got 0.86 for 13 years

 

[stephonydburghduff]

@free2bealways Nice

 

[jeff4607]

@stephonydburghduff wow where was this great deal?

 

[stephonydburghduff]

@jeff4607 It was there last summer in NL...before all this shit. 5 years would have been under 1.5% and 1 year under 1%.

 

[jeff4607]

@stephonydburghduff but 20 years with rate of 1,75 pa is great

 

[atlantadad]

@jeff4607 I got 1.37 24years fixed 4 months ago in Belgium

 

[stephonydburghduff]

@jeff4607 It is...and honestly, I was annoyed we couldn't get a lower rate...