In our current cost of living you might be asking yourself: “Is now the right time to fix and for how long?” It’s a great question and therefore all part of the consideration.
In the realm of mortgages, a fixed rate mortgage refers to a financing option where the interest rate remains unchanged for a set initial period, which could span anywhere between two to five years, and occasionally longer.
With historically low base interest rates, fixed rate mortgages have surged in popularity and are now the most sought-after type of mortgage. It is important to note, however, that not every fixed rate mortgage is ideally suited for all individuals in the market for a new home or seeking to remortgage their current mortgage. We totally understand that you will be asking yourself “Is now the right time to fix and for how long?”
Availability of ten-year fixed mortgage deals
The mortgage market has recently seen a rise in the availability of ten-year fixed mortgage deals. However, it is important to weigh the advantages and disadvantages of opting for such a mortgage. Despite mortgage interest rates increasing across the board, the hikes have not been as significant in the case of ten-year and lifetime fixes (mortgages that remain fixed throughout the entire term, usually spanning 25 years).
If you are a first-time homebuyer planning to purchase this year, fixing your mortgage rate will be an option you are more than likely going to explore. Fixed rates offer the security and predictability of knowing exactly how much you will pay each month over the life of the mortgage loan. This can provide peace of mind as it helps shield you from potential interest rate rises over time.
Decisions about whether or not to fix
However, if interest rates fall during the time period for which your fixed rate is locked in, you could end up paying more than necessary with a fixed rate compared to what you would have paid with a variable or adjustable-rate loan.
Consumer price inflation still remains high, although many experts believe it is likely to have peaked. That’s why it’s important to obtain professional mortgage advice to weigh the pros and cons carefully before making any decisions about whether or not to fix your mortgage rate.
Repayments in times of financial uncertainty
There are both advantages and disadvantages to fixing your mortgage rate. On the plus side, it offers a degree of stability since you know what your payments will be for the duration of the fixed period.
This can ease concerns about making loan repayments in times of financial uncertainty when interest rates may rise quickly.
Understand all of the costs involved
On the other hand, fixing your mortgage rate means that you won’t benefit from any potential drop in interest rates during the fixed period and this could be costly if market conditions change significantly before your mortgage is repaid. There may also be penalties for early repayment or switching lenders which could further reduce savings.
Whichever path you choose, it’s important that you understand all of the costs involved in taking out and repaying a mortgage so that you can plan effectively for the future. With careful planning and budgeting, fixing your mortgage rate could be beneficial in securing long-term financial stability, but ultimately, fixing your mortgage rate is a personal decision.
Advantages
Get assured with consistent payments – By fixing your mortgage for two or more years, you can be sure of how much you will have to pay each month. This could be a valuable help amid the present-day cost of living crisis caused by high degrees of inflation.
Shield yourself from increasing payments – If inflation is not tackled and the base rate rises further this year, this could lead to higher mortgage payments for those on variable rates.
Disadvantages
End up paying more than needed – If you fix your mortgage when many are predicting the base rate will go down, you might end up paying more than required. However, you’ll only realise that in hindsight!
Miss out on the benefit from future rate decreases – If inflation falls faster than predicted and so does the bank base rate, you won’t be able to take advantage of future lower mortgage rates until your fixed deal ends.
Pay early redemption charges to get out of the agreement – If rates do fall and you choose to switch your mortgage or relocate during your fixed-rate period, you may have to pay an early-exit fee which can cost thousands of pounds. It’s also important to remember that there could be limits on how much you can overpay as well.
Looking for a mortgage, or got a question?
Securing the right mortgage deal is paramount, and we understand the significance it holds in your life. That’s why we invite you to take a proactive step towards achieving your homeownership goals. Book a call with our dedicated team of mortgage advisers today.
At Yes Mortgage Services, we pride ourselves on providing personalized solutions tailored to your unique needs and circumstances. Our expert team possesses a deep understanding of the mortgage market, empowering us to explore a wide range of options for you. Whether you’re a first-time buyer, looking to remortgage, or seeking a buy-to-let mortgage, we’ve got you covered.
By booking a call, you’ll have the opportunity to discuss mortgage deals that could unlock the doors to your new home. We will help you identify whether “Is now the right time to fix and for how long?” Our knowledgeable advisers will listen attentively to your requirements, offering guidance and support every step of the way. We’re here to demystify the mortgage process, ensuring you make informed decisions that align with your long-term financial goals.
To take that crucial next step towards your dream home, reach out to the Team at Yes Mortgage Services today. Dial 0800 6125596 or drop us an email at info@yes-ms.co.uk. Let’s embark on this journey together, making your homeownership dreams a reality without the burden of broker fees – we are a no broker fee mortgage broker.
Your home deserves the best, and we’re here to make it happen. Book your call now and let’s create a brighter future, one mortgage at a time.
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“Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.”
At Yes Mortgage Services, we offer a comprehensive range of products from across the market.
Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.
Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.
We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.
