[Closed] Mortgage question - fixing longer term

Longer terms will give you the knowing that your payments are fixed for that term, better budgeting. But its your first home, what are the lock ins/redemption to get out of the long term fix if you want to move and cant port the product especially at 10 years.

Great time to take advantage of low rates tho, and theyre only going to go one way just now, up..... if the come down, its unlikely to go much lower than now (bank rate 0.25%??) when i think the average long term rates are in the 4-7% range.

You might not be able to remortgage, but you likely can borrow more from Nationwide if you and the property meet the criteria.

I've just fixed at 1.17% for 5 years.

I'm struggling to see rates do anything other than a modest rise over the next year or two.

Look at the redemption charges. You could be carrying a massive liability should your circumstances change and you need to sell up.

Other downside is you might not be able to be able to pay off early, or get a better deal if you have more equity in few years.

Yeah as others have said, really check those redemption charges for fixing longer term. My fella just had to swallow a £9k redemption penalty for going with Pepper UK as they're aimed more towards high risk lenders even though he isn't one. I guess the only other concern is what's the interest rate on a longer term fixed rate?

Same downsides as any other fix, redemption charges, portability if you move, overpayment limits, they just apply for longer and may be a bit higher (eg redemption charges decrease over time, on a 10yr fix it will be 5yrs before they get to what they would be on 5yr fix starting now)
Who knows what rates will be in 5-10yrs time? The idea of fixing at the current very low rates for that time is tempting.
FWIW I remortgaged last month and went for 5yrs, 1.86%. The 10yr was a bit higher, the 2yr a bit lower.

Record low interest rates, just remortgaged for less than 2% (with inflation running at 7% currently) for 10 years.

It's a no-brainer tbh.

Unless, of course, you think we're going to go into negative interest rates. Which I very much doubt.

Interest rates are going up. We've been printing money like it's going out of fashion.

With any contract, the key question is "how do I end it?".

There are loads of reasons you might want to do this, and the 'contract' will state the cost/task required to end it, at any point between Day One and Day Last.

I'd assume the penalties are quite high, so at least be fully aware of them.

For me though, never fixed a mortgage - although did move to a Tracker when they became available early 2000's, seemed a no-brainer at the time - and events proved me right (monthly mortgage interest dropped from nearly £1000 to £100 🙂 ).

Interest rates are going up. We’ve been printing money like it’s going out of fashion.

So many things wrong with your statement.

We don't print money, we mark up accounts when the government spends. And the government spend during covid was to replace lost wages.

Sure we did 400 billion of Q/E during the pandemic too. But that is far from the first time over the last 14 years. Nothing new.

The BoE will try very hard not to raise interest rates too dramatically for obvious reasons.

On topic I use a nationwide tracker for the best rate and you can swap without any sort of penalty or redemption. I swap it every 2 years or so or when the deal improves.

Given how far interest rates have fallen they have a lot to climb over a long period I reckon.

Raising interest rates is not a solution to controlling this type of inflation (supply shocks and just in time supply chains.) It's little to do with printing money. That said the BoE don't have many levers to control the economy and interest rates adjustment as a solution has ran out of rope in my opinion.

However, you must plan according to your personal circumstances!

i may be completly wrong but if the mortgage providers where expecting much in the way of rate rises they wouldn't be offering long fixes at good rates.
i went with 5 years at 1.24% 6 months ago, just didn't fancy being tied into it for 10

Hmmm.

Really, it depends on your circumstances. For example, we were FTBers 2 years ago, with a 5% deposit the best rate we would get was 3.7%

Thanks to the lockdown boom and a light renovation our LTV went from 95% to 70% we've just re-mortgaged at 1.1% which allowed us to take out the money we put into the renovation and reduce our term by 5 years at the same repayment. Not that it was any kind of plan, blind luck really.

When I chose a 2 year deal I took a bit of a gamble on rates, assumed with Brexit still raging (Covid was a few months away) that they'd stay low and even if the house only appreciated the cash value of the work we did, and of course combined with the repayments we'd sneak into the 85% LTV range which would at least halve the interest rate.

OPs circumstances are different though, they're buying into a market that's seen huge rises in values in a short time, high inflation and, despite it all, if anything more uncertain times than ever before.

That said, in their position I'd want to at least calculate their settlement figure on the 24 month deal, allow 6% value inflation for the same period and see where that puts them LTV wise. Add maybe 1% to rates to allow for rate rises and THEN decide.

I could only get 1.5 when I remortgaged just now. Bastards. But I fixed for 5 years because I fear rates going up.

Cheers all. I don't want a 10 year fixed, I just couldn't get my head round why I was being offered so much more for fixing longer during a period of low interest.

Cheers all. I don’t want a 10 year fixed, I just couldn’t get my head round why I was being offered so much more for fixing longer during a period of low interest.

Could be as simple as the lender believes there's a enough of a chance that folk will try to buy themselves out - and make their money that way (too).

What were the penalties?