Long Term Fixed Rate - good or bad???

MortgageMaze

First post here...hi!

Hubby and I are currently about to come out of our 1st mortgage deal, fixed for 2 years. Been looking around at the Nationwide 5.09% fixed rate for 10 years or the Cheshire's 5.28% fixed rate for 20 years.

Paid 2 years, so looking for 23 year term. Roughly £124K outstanding but house worth approx £210K.

We are sick of the fees that we have to pay so looking for a longer term fixed rate to alleviate paying them (currently facing approx £700 plus legal fees).

Has anyone any thoughts on these longer term rates...anything we may not have thought about? We've thought about possibly moving into Europe, hence wavering between 10 and 20 years.

Thanks!

dougk_2

It's personal choice really.

Interest rates could drop but I expect that it will drop more than 1% lower ever.

The rates offered now are reasonable and you would know what you are paying for the next 10 or 20 years which could suit you.

Downside is you can't predict the future and you may have a change of circumstances that reuire you to change house, move abroad etc - that siad it would not be the end of the world you would just have to pay a financial penalty.

I like fixed rates and having certainty - others like the chance of getting cheaper shorter deals (like discount rates).

MortgageMaze

Thanks DougK. The moving house bit we looked into and the Cheshire deal is portable (would end up with a 2nd mortgage for the outstanding bit) as that was one of my worries - it's our first house and while it's plenty big enough if we wanted to start a family, it's not out of the question we would move!

Hobo_2

If looking at a long fix the cheshire has flexible features & redemption without penalty time slots in various yrs, i spoke to their head office cust serv who said you can take 25yr option (cost no more) over 23yr, so to my mind you gain more slots = notify in April you are going to redeem sometime in the following 2 mths, check yourself though

simonleblank

Its a gamble if you do not take it up. You will not know your outgoings if you are on a variable rate, wheras if you fix it at close to the lowest rate for 50 years, how much can you be wrong?

fitterastra

Hi,

I am in a similar situation, same amount of money and 23 years to go, house worth around £170k. I have opted for nationwide 2 years fixed as 10 years for me is just too longer timespan and a big gamble.

Good Luck

Scott

To be honest, you've got to weigh the benefits of avoiding any fees against being stuck paying a potentially much higher rate.

Although, I'm just scared of those kind of deals because I've seen some horror cases (people being stuck in fixed rates of 8 & 9% sometimes) just coming out of their deals about now.

It's a gamble. If the bottom falls out of the market (which I, personally, think will happen in the next few years) interest rates will have to rise as we seen in the early 90s. Then you'd be quids in, with a 5.28% rate when people are possibly paying 8 or 9%.

But it's all a gamble, and it's a risk either way.