Whatever you decide my advice is to overpay each month if you can possible afford it. Whatever happens to rates if you can shorten the term you will be quiids in when you pay off early.. Property seems to be overpriced in many areas at the moment I hope we never go back to negative equity. Having too much cash in savings is money down the drain compared to mortgage rates some thing the gov is waking up to when it suits them. There must be an election looming as they waking up on many things, Millions are in debt for everything the main things being house and car. If rates go any higher it is really going to hurt some.

Thanks for the responses, though I'm not really any closer to deciding what my best course of action is!.

I suppose I can take some comfort in the fact that as my house wasn't that expensive (your simplistic assumption example was pretty close Terry!) being both in need of work, and in an area where prices aren't that high anyway. My payments going up by around 25% (for the 5 year fixed NatWest deal) will be felt, but I can manage. Just means some of the long list of jobs needed doing on the house will have to be pushed back.

Also, for several years prior to buying this place, we lived in three privately rented properties which ranged from about £70 to £200 per month more than the 5 year fixed deal mentioned above.

The link between inflation and interest is now kind of broken. In spite of BoE raising rates over & over again lately, the inflation didn't go down that much.

The current prediction is rate may rise up to 6% (or 7% if pessimistic) and after that it will fall.

Be aware of Early Repayment Charges in case you want to offload the house soon.

May be 2-3 years fix will give you most flexibility as rate will surely fall after 2 years.