Fixed Rate Mortgages

Towner_2

Hello, about to get a fixed rate mortgage for 3 yrs at 5.7%, but have now just seen a fixed rate of 5.59% for 10 years!! Not 100% sure what to do. I know no one has a crystal ball, but what is the overall verdict?? Should I go 3 year and risk the mortgage rate going well below the 5.7% or should I fix it at 10 years as the rate will never come much below 5.59%??? Thanks.

Rifleman

To be honest Towner, that is the big question. Only you can decide if you're comfortable with the risk either way.

The way to look at it is that if you can't afford to pay much more than whatever the monthly cost is at 5.59 or 5.7% then you can't take a risk on rates going up and you don't really have an option, you need to fix it for as long as you can for stability of monthly payments.

If this isn't the case then do you want to be stuck with the same deal paying the same rate for years? What if the rates come down over the next 10 years? A 3 year deal may then be more suitable.

Also are you thinking of staying in the same property for 10 years? If not then do you want to be tied to that lender for that long?

Another thing to look at is what are the arrangement fees? Are they greatly different and does this in effect make the cost of the mortgage a bad deal? Lots of lender offer cheap rates but the arrangement fees can be rediculous.

Towner_2

Thanks Rifleman. The fees are about the same believe it or not!! Its just whether to tie myself down that long, its a gamble which I do not like!!! Both products are portable with no fees. Decisions decisions!!

dwsjarcmcd

I agree with Rifleman, this has to be a decision that you and yours take based on your circumstances and what you are comfortable with.