Expectations for an interest rate rise may have eased over the last
couple of months, but even so borrowers are beginning to plan for the future,
and think about what it will mean for them when rates do start to edge up.
Our clients approached the
mortgage service for the Guild of Professional Estate Agents looking for advice
when purchasing a new family home. A move up the property ladder meant taking
on a bigger mortgage, and with two young children, their main objective was to
secure a competitive long term rate and stabilise their mortgage payments for
the foreseeable future.
After discussions with their
mortgage adviser regarding the difference in cost between 2-3 year deals and
those over a longer term, the couple decided that a 10 year fixed rate mortgage
would fit their requirements.
Their intention was to stay
in the property for at least that length of time, and they felt that securing a
mortgage now while interest rates remain extremely competitive could give them
an advantage in the long term, if rates do start to rise. Their mortgage
adviser was able to secure a 10 year fixed rate with a high street bank and the
family are hoping to move in to their new home before the end of the year.
Borrowers must of course be
made aware that the majority of long term deals carry Early Repayment Charges
for the length of the fixed period. It is therefore important for homeowners to
think about any changes in circumstances that are likely to occur over the next
decade, and decide whether more flexibility may be required.
Most deals are portable, but
there is no guarantee that a borrower will meet the lender’s criteria when they
come to move. As a result, being locked
into a deal for this length of time will not be suitable for everyone but for
the right borrower it could be a good chance to secure peace of mind for the
future at today’s rates.
Guild Mortgage Service, Provided by London
& Country Mortgages
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS
ON YOUR MORTGAGE