Is a long-term fixed rate mortgage for you?
Longer-term mortgage options continue to be of interest to a growing number of borrowers.
Noting the surge in interest, lenders have responded by entering the market and launching new long-term fixed rate products. Some have even made the decision to re-introduce products they had previously withdrawn.
The problem with long-term fixed-rate mortgages is the perceived lack of flexibility. While the obvious advantage is knowing exactly what your repayments will be every month from the outset, the downside is that there may be some substantial exit fees to face if you have to move.
As this can stop borrowers from choosing this type of mortgage, some loans have built-in more flexibility.
Consider also that rates for the longer-terms are normally higher than 2, 3 or 5 year options. This is designed to balance out the assumed fluctuation in rates expected during the 7 or 10 year period. Some months you'll expect to pay more than the base rate and some months you'll pay less. However, if the base rate stays relatively low, as it has done in recent times, you could end up with a needlessly expensive mortgage.
Bearing all of this speculation in mind, some lenders have created new products with more attractive terms and conditions.
Kensington Mortgages, for example, has recently launched a brand new 10 year fixed rate residential mortgage. Rates start from 4.34% for up to 75% loan to value.
Kensington also took the step of announcing reductions to its other residential rates and some buy to let rates. However, these reductions only apply for a limited time so don’t be tempted to put your mortgage enquiries aside and start your search today before these offers disappear.
For further information and to discuss the suitability of a long-term fixed rate loan for you, speak to a Deal Direct mortgage expert.