My husband and I are first time buyers are are looking at mortgage options but I'm unsure which option is preferable. We only have a 5% deposit so are being hit with not great interest rates.
Our mortgage advisor has said that the length of the mortgage won't affect the rate in our case, this would be 3.6% for a 2 year fixed mortgage or 3.8% for a 5 year fixed mortgage. For overpayment we would be capped at 10% of the outstanding mortgage value per year for the fixed term, then uncapped.
The questions are:
Is it best to go with a 2 year or 5 year fixed rate at the available percentages? I'm unsure whether fixing for 5 years at 3.8% is preferable to avoid interest rate rises, then potentially remortgaging after 5 years is best, or fixing for 2 years and remortgaging after that hoping to get a better rate due to higher LTV but risking interest rate rises sooner.
Also, is it best to go for a 20 year mortgage with a higher monthly repayment and less overpayment vs a 30 year mortgage with lower monthly repayment and more overpayment (we can afford the monthly repayment on the 20 year reasonably comfortably).
We would more than likely be living in the house for more than 5 years but would at some point down the line be looking to move/sell.