Generally, the longer you look to fix your mortgage the higher the interest rate is. Therefore, if you are looking for the lowest rate possible then it’s the short-term fixed rate you need.
The downside is your mortgage will be up for renewal quicker and when you come to remortgage your payments might increase. These days the majority of people actively search for and choose ‘Fixed-rate mortgage deals.
With a variable rate, your monthly repayments are subject to change when interest rates change. Many people worry about interest rate rises, particularly after such a long period of low rates.
Many people are certain of a rise in the near future. As such looking to a fixed-rate mortgage deal is beneficial as it offers the certainty of monthly outgoings, with no sudden rise in the monthly mortgage repayment offering peace of mind that you will be able to afford the expected monthly mortgage repayment.
If you don’t like the idea of sorting out a remortgage in Leicester so quickly then a medium-term fixed rate would be the way to go. Five-year fixed rates are popular and you have certainty that your monthly payments cannot increase in the foreseeable future.
There is a risk that interest rates might drop meaning you are paying more than you might have been had you fixed for a shorter period.
There are only a limited number of 7 and 10-year fixed rates mortgage deals on the market. These have always been the least popular. Customers tend to feel this is too long to fix as a lot can change in a decade.
However, a high proportion of homeowners say they would consider longer-term fixed mortgages. (These are the most expensive fixed mortgage products available)
When choosing your mortgage deal be mindful of booking and arrangement fees. A booking fee is payable up-front and an arrangement fee is payable on completion. Some people add fees to their mortgages, but this increases the total amount repayable as interest accumulates on the fee.
If you are taking out a small mortgage then it is more likely that you would want to take out a mortgage with no fees, even if a slightly higher rate of interest applies. The opposite applies if you are taking out a medium or large mortgage, your mortgage advisor in Leicester will help you with this tricky decision.
Choosing a mortgage requires consideration. There is no one mortgage product that suits everyone. Your selection will depend on your personal circumstances.
For example, if you think you may be moving in the next two or three years you may wish to choose a fixed deal for that period. (It is possible to ‘port a mortgage’ but you may be better off discussing this with your knowledgeable mortgage advisor in Leicester). If this is your final move, perhaps a longer-term fixed rate may be more suitable.
Date last edited 24/04/2020