With a number of 5-year fixed mortgage rates available at under 1% during 2021, many borrowers have been tempted to take a long-term fixed rate, but is this right for you?

Today I discuss why it’s important to take everything into account when deciding upon the most suitable mortgage product for you – you’re unique and what’s right for someone else may not be right for you!

All of our situations, hopes and goals are unique to ourselves – not a one size fits all

Never a right or wrong answer to what type of rate we should have – we must make decisions based on the information and options we have available to us when making a decision.

03:01-05:19

Main different types of rate:

Fixed Rate

  Variable rate

• Tracker
• Discounted
• Standard Variable Rate

05:20-13:09

Things to consider – which can be closely intertwined with eachother. A whole of market mortgage broker will be able to help:

• Attitude to risk
• Our budget – what is your max budget?
• Our plans for the next 2,3, 5 years and beyond

o  Expanding or contracting family

o  Childcare requirements changes

o  Desire to live within a school catchment area

• Our relationship
• Our career path and expectations

o  Potential Increase in Salary

o  Possible Relocation

• External Factors e.g. Market Uncertainty - be mindful, but don’t let it stop you

13:10-15:40

Q  - “Why did my best friend manage to get a better rate on his mortgage, even though we live on the same street?”

A – There are so many factors that affect the rate you’re on, even with the same lender. When you took the mortgage, the size of your deposit / amount of equity, type of rate e.g. 2 year fixed versus a 5 year fixed rate. 

REMEMBER:

1)    Always SEEK ADVICE for your own circumstances, and;

2)    A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments

15:43-17:23

LOWEST RATE ISN’T ALWAYS BEST!!! – Lenders offer products, some with fees and some without no fees. It may be more cost effective for you over the term of your product (for example over a 2 year fixed rate period) to have a slightly higher rate with no fee, as opposed to the lowest rate that has a fee (such as £999) attached.

 17:24-23:28   

o  Gives peace of mind that monthly payments are fixed for a set period of time e.g. 2, 3, 5 or 10 years

o  Tied to that product & lender for that set period and potentially have to pay charges/penalties to come away

o  If rates across the market drop – your rate won’t as it’s fixed

o  At the end of your fixed rate, you can organise another mortgage rate – although you’d have to access the rates that are available at that time

23:29-26:03

o  Can go up or down

o  There may be products with no early repayment charges/penalties for repaying early or switching to another lender.