It used to be that the most popular period for which to fix a mortgage rate was 2 years because such a short-term fixed arrangement provided a combination of competitive rates but also the flexibility to review your options after a relatively short period.
However, longer term fixed rate deals are becoming increasingly popular and studies have indicated that there are now almost 75 per cent more 5 year fixed rate deals available than in the past year or so. This compares with an increase of only 33 per cent in the number of 2 year fixed rate deals available over the same period, according to the data provider Moneyfacts.
But what are the advantages of a long term fixed rate and are these deals comparable in terms of overall cost with the shorter term deals?
Some mainstream banks now offer their cheapest ever 5 year fixed mortgage rates with some as low as 2.49 per cent; albeit only for those borrowers fortunate enough to be able to come up with a 40 per cent deposit or have the equivalent amount of equity in their current home.
The UK government schemes that are incentivising banks to lend more cheaply, such as Funding for Lending and Help To Buy, have meant that 5 year fixed rates for mortgages have gradually been falling and are now cheaper than they have been historically and are, therefore, more appealing to the consumer. So there is certainly a variety of options when it comes to long term fixed rate deals but is it a good idea to fix a large mortgage loan for 5 years?
With an historically low and, moreover, stable Bank of England Base rate you should think carefully about whether you want to fix your mortgage at all. With the 0.5 per cent base rate not expected to increase until 2016 there is every reason to anticipate low interest rates for some years to come.
But there will always be some borrowers looking for certainty in their monthly repayments so there will always be an appeal to a longer term fixed rate. Indeed some building societies are offering 7 and 10 year fixed rates that are also good value.
Islay Robinson, CEO of London mortgage broker Enness Private Clients believes that with interest rates set to remain low for the foreseeable future there are certainly many compelling reasons to choose a tracker rate for your next mortgage. However, for those home owners who have a very large mortgage and who wish to benefit from the certainty of knowing exactly what you will pay every month, then the falling cost of a medium to long term fixed rate product could be the perfect solution. Borrowers should be aware that fixing for longer than five years holds a greater risk if personal circumstances change because of the high early repayment charges associated with these deals. They are not always portable and should you wish, or need, to move house during the fixed period it can be much more complicated to do so and might require a re-mortgage.
However, longer term fixed rate deals are becoming increasingly popular and studies have indicated that there are now almost 75 per cent more 5 year fixed rate deals available than in the past year or so. This compares with an increase of only 33 per cent in the number of 2 year fixed rate deals available over the same period, according to the data provider Moneyfacts.
But what are the advantages of a long term fixed rate and are these deals comparable in terms of overall cost with the shorter term deals?
Some mainstream banks now offer their cheapest ever 5 year fixed mortgage rates with some as low as 2.49 per cent; albeit only for those borrowers fortunate enough to be able to come up with a 40 per cent deposit or have the equivalent amount of equity in their current home.
The UK government schemes that are incentivising banks to lend more cheaply, such as Funding for Lending and Help To Buy, have meant that 5 year fixed rates for mortgages have gradually been falling and are now cheaper than they have been historically and are, therefore, more appealing to the consumer. So there is certainly a variety of options when it comes to long term fixed rate deals but is it a good idea to fix a large mortgage loan for 5 years?
With an historically low and, moreover, stable Bank of England Base rate you should think carefully about whether you want to fix your mortgage at all. With the 0.5 per cent base rate not expected to increase until 2016 there is every reason to anticipate low interest rates for some years to come.
But there will always be some borrowers looking for certainty in their monthly repayments so there will always be an appeal to a longer term fixed rate. Indeed some building societies are offering 7 and 10 year fixed rates that are also good value.
Islay Robinson, CEO of London mortgage broker Enness Private Clients believes that with interest rates set to remain low for the foreseeable future there are certainly many compelling reasons to choose a tracker rate for your next mortgage. However, for those home owners who have a very large mortgage and who wish to benefit from the certainty of knowing exactly what you will pay every month, then the falling cost of a medium to long term fixed rate product could be the perfect solution. Borrowers should be aware that fixing for longer than five years holds a greater risk if personal circumstances change because of the high early repayment charges associated with these deals. They are not always portable and should you wish, or need, to move house during the fixed period it can be much more complicated to do so and might require a re-mortgage.
This article has been written on behalf of Enness Private Clients, who offer an expert and focussed service specifically for clients requiring London mortgage broker Enness Private Clients. As a very large mortgages they work with people from all walks of professional life: from lawyers, hedge fund managers and board directors to entrepreneurs and self-employed business people.
By : Michelle N Symonds
Article Source: http://EzineArticles.com/?expert=Michelle_N_Symonds
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