Is it wise to go on 10yr fixed rate

rachelandgromit

My brother and his girlfriend's 2 year fixed rate is up in July. They bought at the peak, however as they had a large deposit, at least they won't be in negative equity (probably looking at around 75% LTV). They are both 25 and will be looking in the next 3-4 years at wedding/family, etc... they have got a family home and have no intentions of moving.

They know that when they are out of the fixed rate, their mortgage will drop but their argument is they do need some stability and don't want to be in a position where they are unable to secure a half decent fixed rate. I'm on one for 10 years and whilst this suits me because I'm on my own, couldn't take the risk if interest rates went up, and I needed this stability, I'm aware I am paying a price for this (5.99% for 10 years, started Oct 08 when this was the best rate going :mad:), however for me I know that each month this is my outgoings, and I don't have to worry about more fees and changing a mortgage again (for sometime anyway). What would you suggest, do you think a 10 year fix is wise at the moment and any recommendations?

Thanks,

Rachel

davetrousers

Depends on how much a 10 year fix would be!

I'd be inclined to say no, but I'm no expert.

My 3 year fix finished in August and my Mortgage dropped by £170 a month. This allows me to overpay more easily, thus reducing the money owed, but also when rates do increase, then interest is added on a lower outstanding sum.

Squish_21

I wouldnt fancy comitting to a 10 year mortgage unless it was a really low rate, in the current climate I’d probably go for a 3yr fixed.

rachelandgromit

But it's then the vicious circle of fee's again in another 3 years. Perhaps just to go onto the standard variable and overpay may be a wise option and hope fixed rates don't go up too much in the meantime....

somethingcorporate

rachelandgromit wrote: »

But it's then the vicious circle of fee's again in another 3 years. Perhaps just to go onto the standard variable and overpay may be a wise option and hope fixed rates don't go up too much in the meantime....

It depends on the SVR, my wife and I are about to drop on to a 4.99% SVR so we're going to fix straight away at 5.35% for five years. I cannot see much benefit on gambling for the sake of 0.4%.

Since I can only see rates going in one direction I think long term fixeds are great and would recommend taking one

Wobblydeb

I think a 10 yr fix is a good idea if the rate, and personal circumstances suit fixing for that length of time.

If you can get anywhere near 5%, then the rate is good, and if you aren't planning on selling up and having to pay redemption fees (and can take your mortgage with you if you move house) then it also suits your circumstances.

Over the last 6 years, I have fixed for 2 years each time. The rates have been:
4.99%
3.99%
6.24%
...and in the last 6 months 3.40%

If you add in fees, then its got to be somewhere close to 5% over the same time period, which I'm pretty sure I've read somewhere represents a good long term rate.

Knowing that you can comfortably afford your mortgage each month must be worth a fair bit in peace of mind too!