28/11/2024
Do you need to re-mortgage?🏡
Should I fix my mortgage for two or five years right now?🤔
1️⃣Firstly, there is the cost associated with mortgage deals. In addition to the interest rate, there are often product fees, legal fees, broker fees, and early repayment charges to take into account. It is important to carefully consider all of these expenses when evaluating different mortgage options.
Many individuals tend to focus solely on the interest rate when comparing mortgages, but it is crucial to also factor in additional fees. For example, paying a £999 product fee every two years as opposed to every five years can significantly impact the overall cost of the mortgage over time.
2️⃣Secondly, have you considered whether the value of your property is changing? It is not uncommon for clients to have high loan to value mortgages, but are planning renovations that will significantly increase the value of their property. Transitioning from a high loan to value band to a lower one could potentially allow you to secure better rates in the future, making a shorter term fix an ideal option.
3️⃣Thirdly, your attitude towards risk will play a crucial role in your decision making process. If interest rates were to rise instead of fall, would you be able to afford higher payments in two years' time? Many individuals are opting for five-year fixed rates to protect themselves from potential market fluctuations after experiencing a challenging period.
Furthermore, it is important to determine whether any adjustments need to be made to your mortgage or if selling during the fixed term period is a consideration. While mortgages are portable, it is generally advisable to be nearing the end of your fixed rate or be on a tracker when contemplating a move. If you anticipate making changes within the next five years, a two-year fixed rate may be more suitable – or even a tracker, depending on your future plans.
