7-Year Mortgage Period

chrisdraper85

Hi All,

My wife and I have just completed the term of our first mortgage, and first on our new home - a 2 year fixed rate mortgage with Natwest. We managed to secure 3.19% on this and now looking around the market, despite interest rates being lower, this doesnt seem to be being passed onto mortgage rates.

We have since found a deal with the Chelsea Building Society for a 7 year fixed-rate deal which on the face of it, looks good - we need £95,000 for the remaining part of our mortgage and to lock in a rate of 3.69% over 7 years (when rates are surely only going to increase in that time) seems like a great idea. This also has relatively low product fees and will allow us to overpay by up to 10%, which we currently do. We are also keen on having our mortgage squared away so that we dont have to think about it for 7 years!

My only concern is that 7 years is a long time to be locked into a fixed rate mortgage, and although I can only see upside in interest rates I am reluctant to tie myself into a deal for that long.

Would love some advice from the forum!

Thanks,

Chris

Thrugelmir

chrisdraper85 wrote: »

My only concern is that 7 years is a long time to be locked into a fixed rate mortgage, and although I can only see upside in interest rates I am reluctant to tie myself into a deal for that long.

Statistically people move within a 7 year time frame. So only you know if this property is for you in the long term. As the exit penalties may outweigh the initial attraction.

CapJ

All fixed term mortgages allow exits, they just charge and Early redemption charge. This by law can't be more than the cost to the mortgage provider of terminating early (Averages can be used). It is often high at the beginning of the term and lower towards the end of the term.

These are important to take into consideration as it does allow you to move. What are the early redemption charges on this mortgage?

You can also sometimes port your mortgage to a new property. This is never guaranteed as the mortgage provider could tighten lending criteria. What are the current porting conditions?

Finally there is also sometimes an option of buying a new house, converting the current mortgage to Buy to Let and letting out the house.

You should investigate this information and see if it suits your circumstances.

chrisdraper85

Thanks both,

We may move, in fact I suspect we probably will, so will definitely have to understand a bit more about porting.

My understanding was that if we moved, any mortgage that we hold would be transferred to the new property, and we would take out an additional mortgage (either with our current provider or a new one) to cover any additional value of the house... is this correct?

Therefore we would never exit the mortgage, simply transfer (port?) this to a new property.

Chris