young woman unsure about long term fixed rate mortgageBy John Cossons, Mortgage & Protections Designer with Anstee & Co.

With the recent announcement that the Bank of England has increased the bank base rate for the first time since August 2018 is it time to consider a long-term fixed rate for your mortgage?

A mortgage is a long-term commitment, and with the ever-increasing price of property outstripping average incomes, most new mortgages that I write are over a term of 35 years.

Although the bank rate has only increased to 0.75% and has been below 1% for the last 13 years this does not mean that it will stay this way and we need to remember that historically rates have been much higher. The rate 14 years ago, in January 2008 was 5.5% with the highest bank rate in the last 35 years being 14.88% in October 1989. In the 15 months from June 1988 to October 1989, the rate increased by 7%! Some of us, of a certain vintage, remember the pain associated with this.

Whilst no one is expecting rates to rise to these levels in the foreseeable future a rise of just 1% could have a significant impact on your budget when your fixed rate ends.

What are the other implications of fixing your mortgage rate for five years or longer? 

PFS logoThe first thing to consider is that the rate is usually higher the longer it is fixed as the banks hedge against possible rate rises. This is all well and good if the rate does go up, but what if they don’t? you would be tied into a higher rate for longer.

What if you want to move, or repay a large lump sum during the fixed-rate period? There is always a penalty for repaying a fixed rate earlier than planned and the longer the fix the higher the penalty.

If you are moving you may be able to port the mortgage, move the rate and terms of the existing mortgage to a new property without any penalty, but this ties you to your current lender and there may be a better offer available from another lender.

Everyone’s situation is different and using a mortgage advisor to help you to arrive at the right decision can be invaluable in this situation.

If your current fixed rate is coming to an end, or if you are on a mortgage lenders standard variable rate now is the time to talk to one of our mortgage designers to make sure that you are getting the best mortgage deal for you.

How Anstee & Co can help you with a long-term fixed-rate mortgage.

We are a firm of Independent Mortgage Brokers. The financial advice we offer is unbiased. We look at all the options available to you from the “whole of the market”.

You can review the current best buys from our website which is updated daily. Remember the lowest rate is not always the most suitable mortgage for you.

Why not arrange a meeting with one of our mortgage advisers? The initial fact-finding meeting is free and without obligation. Meetings can be arranged at a time and location that is convenient for you. This includes your home or place of work.

call back logo for help with a long term fixed rate mortgage We have offices located at-

  • Kettering, Northamptonshire
  • London, Greater London
  • Stamford, Lincolnshire
  • Wellingborough, Northamptonshire
  • Market Harborough, Leicestershire
  • Towcester, Northamptonshire

Our advisers also live and make use of meeting rooms in –

  • Raunds, Northamptonshire
  • Bedford, Bedfordshire
  • Northampton, Northamptonshire

We make full use of video conferencing facilities such as-

  • Zoom
  • Microsoft Teams
  • Skype
  • Facetime

Additionally, we can also arrange a conference telephone call. There is no need to visit an office as all work can be handled remotely.

So, if you have any thoughts or comments on this article, “Time to consider a long-term fixed-rate for your mortgage?”, then we would love to hear your thoughts.

Source:

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

Financial Conduct AuthorityFinally, the information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).

AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.