Are 10 Yr Mortgages the future

stevemdaw

Evening all,
I have 15 yrs of a 25 yr motgage remaining. When I took the mortgage out originally, it was around 5.49% and costing £1600 per month, a couple of years ago the fixed term ended and I am currently on the Nationwide 2.5% rate (2% above base rate) paying £1275.

I'm confused as to when rates are going to increase, but the only certainty is that they will do one day - the question is when. So, if you know that you can afford the increase to 3.39 (as per the Nationwide deal) - do you think it's worthwhile doing? 10 years is a long time, but things can not go much lower than they are now - and an increase is being mooted here and there. It would be £90 per month which I am comfortable with - but should I go with an £50 per month increase which a 5 year deal would give me.

Any advice is much appreciated. I just like the idea of 10 year giving me the knowledge of what the future holds. 5 years would do this as well, it would save me £3000 if the current rate stands still over the 10 year, but over 5 years I think the rate would go up over the 3.39 wouldn't it?

I'm very much risk adverse, and hence I'm leaning towards the 10yr, but wanted to make sure I got other opinions as well.

Any advice appreciated.
Thanks
Stephen

Southend1

Is there a chance you will want or need to sell up and move during the 10 years? Or make a big overpayment? I believe the early redemption fees are high. If not then personally I would fix for as long as possible for the certainty. Especially because as you say rates can only go one way from where they are today.

Thrugelmir

Another option is to simply overpay on your current mortgage. The less you owe the less interest you'll ultimately end up paying. Interest rates will never be as low as this again.

dimbo61

Well Stephen when your mortgage dropped by £325 a month what did you do with the extra money ?
If you have no plans what so ever to move then taking a 10year fix at 3.39% might be good long term planning.
The BOE base rate has been 0.5% for over 5 years but it would only need two 0.5% rises and you would be better off with that deal.
If you can afford it I would set the mortgage payment to £1600 every month and take the fix from Nationwide but Only if you will not be moving.

stevemdaw

Thanks for the good advice.
When my mortgage dropped, it co-incided with having a baby, and hence the money was used for nursery fees, that is now over and I've been overpaying the mortgage for the last 2 years.

We have no plans to move again, and indeed we're currently thinking of having a loft conversion performed, so we're in here for the long term. This may prevent me being able to make overpayments in the next couple of years.

I think i'm going to go for the long fix and overpay whenever possible. This gives me the confidence of knowning where I stand.

MABLE

We took out a 10 year fix with NW in 2005 at 4.89 percent and huge early redemption fees and thought it was a good deal. However with hindsight was not one of our wisest decisions. That said we have been overpaying since January 2014 and with overpayments and a lump sum we will be mortgage free January 2015. We will still have to pay penalties of about £140.

We had thought about letting the mortgage run its full term as in September 2015 are rate would 0.5 percent above the bank rate. By paying it early we have reduced the mortgage term by 12 years.