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 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.
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.
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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.
https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp
AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.