Fixed-rate mortgages are confusing conundrums, and often leave homeowners scratching their heads about whether they’ve made the right choice.
Perhaps you’ve even found the perfect deal or interest rate, you’re just unsure of the time to go for, well that’s why we’ve put together this useful blog to give you a bit more information about how long your fixed-rate mortgage should be.
What is a fixed-rate mortgage?
A fixed-rate mortgage is over a period, usually anywhere from 2 to 10-years on average, that ensures you pay the same monthly repayments until the period is over.
It means your interest rates never change, unlike a variable interest mortgage.
If you agree on a % with your mortgage lender or bank, then that is the amount you’ll pay for the duration.
It sounds great…
For many people, fixed-rate mortgages are great, they know how much exactly is going out each month and for how long. But it doesn’t always work out so well.
Due to the interest rate being fixed, you could easily find yourself paying far more than a neighbour for example.
Interest rates may be high, so you decide to take out a long-term 7-year plan after finding a good rate lower than most.
3-years in however and the interest rates are slashed, you’ll then be left with 4-years of paying off your current rate, at a higher interest than what is currently available.
Of course, there is a flip side to this, getting in before the interest rates are raised, it’s all about timing.
What length of time is best for me then?
How long is a piece of string? It is purely down to your circumstances, and how certain you are of your plans.
If you’re going to opt for a fixed-rate mortgage, you have so many options including;
Each of those is likely to offer different interest rates. 2-year options are usually the cheapest as they’re short term, whilst the longer the years, the higher the interest usually.
They all offer up something different though, and what may suit you, may not be the same for someone in a similar value house, it’s all about circumstances.
What we need to understand to help you
There’s an endless list of reasons why you may need a certain type of mortgage, but some of the main ones include;
- Is the property you’re looking at going to be a long-term home?
- Are you using a Help to Buy or Lifetime ISA to purchase your home?
- Is it a short-term move? Likely to move on in a few years due to work commitments or starting a family etc.
If it’s a long term move, then you may look to cash in on a good interest rate with a fixed rate of at least 5-years, however, if you are unsure of your what may happen in the future, then a couple of years with a low-interest rate should allow you to decide without hurting your pocket too much!
If you’re still undecided, give Warrington Mortgage Centre a call and a member of the team will help. We can be reached Monday-Friday on 01925 573 328 you can also visit our first-time buyers or remortgages page to use our quick contact forms.