3 Year Mortgage

Posted on 26 September 2010 by Jutta


We have a combined interest-only/repayment mortgage of approx. £70000 each. This will be repaid by 2014, with any shortfall on the endowment cleared by a lump sum due to us in 2013.

We are currently on a SVR of 2.5% and whilst this is perfectly affordable, we are worried about any future interest rate rises. We have not been able to identify any lender willing to re-mortgage over a term less than 10 years, whilst we want to clear the mortgage by 2014 at the latest.  Age should not prevent us from re-mortgaging as my husband is only 57 and I am 62. 

Are there any lenders offering a decent fixed rate over a total term of 3 years?  Any advice would be greatly appreciated.

Jutta

I am aware of at least 3 Lenders who have a minimum mortgage term of 3 years and 1 with a minimum term of 2 years. 2 of these have 3 year Fixed rates with rates starting from around 4.50% depending on your overall loan to value.

I note that your existing mortgage rate is 2.50% and wonder if you have asked your existing Lender if you can transfer to a 3 year Fixed rate with them? Quite often Lenders have special deals for existing customers which they don't tend to advertise. This would undoubtedly be the cheapest option if it is possible.

You also have to ask yourself whether or not it is worth tying yourself into a Fixed rate which would be around 2% higher than you currently pay. The answer to this will not only depend on how fast you think Bank Base rate will increase in the next 3 years but also whether the extra cost would be worth the peace of mind of knowing that your interest rate and monthly payments are not going to jump up unexpectedly.

I recommend that you talk to an independent mortgage broker with access to the whole mortgage market about your situation.

Peter

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