Are you looking to remortgage? Perhaps you are approaching the end of your fixed rate advantage period or maybe you are currently on your lender’s Standard Variable Rate, if so it is time to consider your options. Interest rates remain relatively low at the present time however we cannot say what will happen in, potentially, the very near future. With this in mind you should consider obtaining a fixed rate mortgage to provide you with as much certainty as possible. There are various fixed rate options including 2, 3 and 5 year fixed rates. The interest rates can vary dependant upon your individual circumstance, but if you are planning on living in the same home for a significant amount of time perhaps you should consider fixing your interest rate for as long as possible. This means that you would know what your monthly mortgage payment would be for the whole of the fixed rate period, leaving any uncertainty aside.
As well as the advantage periods mentioned above, there are also 10 year fixed rate options available. Did you know that you can get a 10 year fixed rate from as little as 2.25% with the Coventry Building Society if you currently have more than 50% equity in your home? This would give you security of payment for the initial 10 years and you could plan your finances around this knowing that your monthly payment will not change. This is definitely something worth considering if you are able to, especially as we continue to live through these uncertain times.
Whilst the security of the 10 year fixed rate is very appealing you also need to consider the disadvantages of this. For one, the interest rates are slightly lower for shorter length fixes and if you need to keep your monthly payments as low as possible, you may wish to consider a shorter fix. Also if you are planning on moving home within the next 10 years this could possibly mean a shorter fix is more suitable for you. Although you can often port your mortgage to a new property, this is not always the case and you may need to consider that further borrowings could be required to purchase another property.
If you are considering your mortgage options you should contact an independent financial adviser who can discuss this with you in detail.
Jenny Croskery Cert CII (MP)
21st January 2019