The Bank of England has held for another month – the 78th month in a row! But coming months are expected to bring changes and Mark Carney, Governor of Bank of England, has suggested the base rate will rise around the turn of the year. This will move many into a new territory of an increasing rate environment –something we haven’t seen for many years, and that new borrowers may never have seen, or had to deal with.
Lenders haven’t yet raced to increase their rates and there are still good deals to be had, so now may be the ideal time for you to review your mortgage and change to a fixed rate deal. But with the pending increases expected to be a slow upward climb it is always best to look to the future and not just where rates sit right now.
So if you decide to fix your mortgage rate what else do you need to consider?
- Choosing a 2 year fixed deal will allow you the security of a non-changing monthly repayment for those 2 years, however whatever has been happening to rates in the meantime will still impact of you when your deal ends and you need to re-mortgage again. You will then be facing a higher rate on your new deal.
- So, perhaps you should choose a longer fixed period, such as 5 years? But not all mortgages are portable and if you decide to move house during the fixed period you may face hefty penalties.
- And of course, nothing comes free. A fixed rate deal will always have fees but it is important to remember that these fees should be considered over the full duration of the deal. This could mean although a fee appears higher for a 5 year deal than for a 2 year deal, over the longer term the 5 year deal could still save you money.
So deciding on the best mortgage and knowing all the pros and cons isn’t easy. Seeking mortgage advice from an independent mortgage broker, like The Mortgage Clinic, will help to ensure you have the best deal for your needs – both shorter term AND longer term.