Is it time to secure a long term fixed rate deal?

March 17, 2016 by Brendan O'Neill

Advice & Tips

Lenders have started offering low fixed rate deals, which can guarantee your mortgage payments for the next decade. A long term mortgage deal could reduce the stress of searching for a new deal, but could also cost money for some borrowers.

There are plenty of advantages to securing a long term mortgage deal, especially for those on a tight budget who want to be able to plan their finances. As the economy is uncertain at the moment, it is unclear whether mortgage rates will soar or stay at the same rate for the foreseeable future. Securing a fixed rate deal for 10 years offers peace of mind and security.

As set-up fees are increasing, you could save money by fixing your mortgage for the next decade. If a borrower swaps to a different deal every two years and pays a set-up fee each time, this could mount into thousands of pounds which could have been used to reduce the mortgage debt.

If your circumstances are likely to change during the next decade, it makes sense to swap to a long term fixed rate deal, especially if you’re going to start a family during this time or intend to look for another job.

However, as rates are at their lowest, some borrowers may be reluctant to tie themselves into a fixed rate for a long period. If rates don’t rise and you are paying more every month, you could find yourselves paying more on your mortgage for a longer term.

Seek advice from a CeMAP trained mortgage adviser if you are unsure about the best course of action.