How Long Should I Fix My Mortgage For?

Fixed Rated Mortgage Advice

If it’s important for you to know exactly how much your mortgage payment will be you should take out a fixed rate mortgage. The longer you fix for, the higher the rate becomes.

Whether you are looking for first time buyer or remortgage advice, it may be difficult to know why it matters how long you fix your mortgage for, that’s why we made this free helpful guide.

Which is the Cheapest Fixed Rate Mortgage?

If you want the cheapest possible fixed rate mortgage then a 2 year fixed rate might be right for you. The payments will be low but on the downside, 2 years comes around quickly and it won’t be long before you have to look for a new deal again. If interest rates go up in the meantime then you may be faced with higher payments at renewal.

Should I fix my Mortgage for 5 years?

If you don’t like the hassle of applying for new mortgages all the time then a 5 year fixed rate would be better. Your payments would then be stable for a much longer period. 5 year fixed rates are more expensive than 2 or 3 year deals. A potential negative would be if interest rates fell during the fixed rate period then you would not benefit from a reduction in monthly payments.

Should I take out a Long Term Fixed Rate Mortgage?

Whilst 2 year and 5 year fixed rates are the most popular, you can fix them for longer. Some Lenders offer 7 or 10 year fixed rate mortgages.

These long term fixed rate mortgages have never been massively popular in the UK. Perhaps we feel that much can change in a decade and we don’t want to get hooked into a deal we can’t get out of.

If your circumstances change then it can cost you money to repay your mortgage early. This is known as an Early Repayment Charge (ERC). The ERC is often calculated as a percentage of what you owe. For example, if you settle a £100,000 mortgage early and the early repayment charge is 2%, then you would incur a £2,000 penalty for breaking the contract.

It’s usually a mistake for customers to think about “beating the system” or predicting what will happen to interest rates in the future. When selecting how long to fix your mortgage for, focus on your own personal situation. For example, are you likely to move house again in the near future? Will you be looking to pay a lump sum off the mortgage?

Are you looking to remortgage for home improvements to give you a lower loan to value at the point of remortgage?

You should also avoid chasing “headline” deals. The lowest rates often come with high arrangement fees which some customers are keen to avoid.

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

22nd April 2024

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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