WHICH MORTGAGE PRODUCT?
The Million Dollar Question? Should I fix for two, three, five or even 10 years?
Knowing which option to go for isn’t always an easy decision, and a lot of it comes down to rate and the monthly repayment.
Two-year fixed mortgages are traditionally the go-to rate offering and usually offering the best mortgage rates, however over the uncertainty of recent years means some borrowers have wanted more longer-term deals instead. Three, five and 10-year mortgages offer longer repayment certainty but given that longer terms typically resulted in higher mortgage rates, therefore more expensive. This is no longer the case now with current mortgage interest rates.
There’s risk to both short and longer term fixed products too.
Opt for a two-year deal and if interest rates have risen over that time, you’ll be faced with far higher repayments after a relatively short period. Then if you’d taken out a longer-term deal instead, you’d be protected against those higher repayments for much longer. However, if the opposite were to happen and interest rates fell, you’d be able to benefit far more quickly if you were on a two-year deal, where as those tied in for five and 10 years could end up paying far more in interest than they’d otherwise have to.
Seek Advice, we are here to help you.
Ultimately, it’s all about balancing the risks, and factoring in your circumstances, preferences and budget to decide which term would be best for you. This is also where the expertise of a broker can be invaluable, as they’ll be able to discuss the options in more detail and help you decide on the mortgage that’s perfect for your needs.
Call us here at The Mortgage Company on 0115 951 8898 and we will be more than happy to help and guide you.
