Posted on 5 February 2012 by Tanya
I am currently on a SVR of 2.79% with my mortgage. I am paying 1/3 capital repayment and 2/3 interest only. I have £130,000 outstanding. I am now wishing to have a mortgage which is all capital repayment. I have been offered a 10 year fixed mortgage at 4.99% with a £1500 set up fee. I am unable to source the 3.99% deals due to affordability. Should I fix for 10 years?
Undoubtedly long term fixed rates are looking very attractive at the moment, but they are not for everyone. There are several questions you need to ask yourself before opting for this choice to ensure that you do not regret it in the future:
1. Am I happy to pay more for my mortgage now to have the security of knowing that my mortgage payments will not rise for the next 10 years?
2. Am I prepared to take the risk now to keep my mortgage payments down, knowing that at some point interest rates may rise and my monthly payments will go up?
3. What if interest rates do not go up in the next 10 years, will I regret opting for the security of a Fixed rate when I could have saved money by opting for a variable one?
4. What happens if I want to move and increase my mortgage?
5. Can I redeem my mortgage or pay off lump sums without penalty during the fixed rate period?
Everybody will have a different attitude to the risks involved and unfortunately no one has the benefit of hindsight when making these choices. I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers. Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you find the right mortgage for your situation.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.