should i get a fixed rate mortgage and if so for how long?

Answer 1

It basically depends on your circumstances. If you are planning to move again in the near future, then you will need to ensure the mortgage is portable (i.e. can be transferred to another property). Check the redemption penalties, and avoid anything which has an extended tie-in (where you're locked into paying the standard variable rate for a period of time after the fixed/special deal has ended).

As for whether you should get a fixed rate mortgage, it depends on your circumstances. A 25 year 100K repayment mortgage at 5.49% costs in the region of £610 per month. If interest rates went up by 2% then the same mortgage would cost approximately £733 per month - an increase of £123 per month. The question is: Could you afford the increased repayments in the event of an interest rate rise? If not, then no matter what fortune tellers tell you - GET A FIXED RATE MORTGAGE. In such a scenario, you cannot afford to gamble the roof over your head.

If your mortgage is really tiny in relation to your income (e.g. interest rates would have to rise by 20% to cripple you), then you have more degree of choice. In which case, you would use your own "gut feeling" and look for the best deal there is in terms of monthly repayments - avoiding anything which has a penalty.

If you go for a fix, then the length depends on the mortgage itself and your circumstances. If you are planning to move again soon, then you might opt for a shorter term fix, or pick a mortgage which is portable (i.e. can be transferred to a new property).

You also need to take into account what your payrises are likely to be throughout the duration of a fixed rate. If you get little or no payrises, you'll want to fix for as long as possible.

Answer 2

Depends upon... when you are going to move or re-mortgage. There are usually early surrender penalties. So why go for fixed rate? The answer is not just to pay as little as possible - although of course you can reduce your payments but rather it is the predictability of knowing what you will have to pay for some years enabling you to manage your budget better. It is a gamble as to whether you will be better off. You can also get a tracker which can go up & down but is at a rate lower than the standard rate. This is of course variable. I am not sure that future interest rates can be so well predicited. Hopefully some guru will answer this! Remember when you do fix, next month there may be a better offer but too late you are tied in. Hence my comment about budgeting rather than just minimising costs.

Answer 3

Yes. Adjustable rate mortgages are bad news. many people with them today are having to deal with rate increases.

As for loan duration, the shortest is the best.

Google "mortgage calculator" and check the difference in 15 year and 30 year mortgages for your desired loan amount.

Answer 4

Right now, I would get a fixed rate. You know how much you can afford, so make it as short as possible. There can be penalties on paying it off too soon, I really don't like the fixed rate, but right now, it's a pretty good deal.

Answer 5

Yes for 10 years i`d say. Interest rates are going up anytime now. try leeds or woolwich. You can even fix it for 25 years

Answer 6

Fixed is the only option in my opinion--unless you want your payment to possible double over the net five years.

Get the shortest morgage possible that you can afford the payments on.

Answer 7

I would say yes as it looks like we are in for hikes mind i blame the lenders they want to make more money out of us,same applies to estate agents

Answer 8

Definitely! 2yrs fixed is what we've got (UK).