13 years remaining, remortgage soon, opt for 10 year fixed?

oellph

We have 13 years remaining on our mortgage (£86,000) and due to renew early 2017. We'd like to pay it off sooner, so we are thinking of a 10 year fixed interest mortgage over a 10 year term. (Current property value is about £230k).

Is there something better we should be considering?

AnotherJoe

No idea, since one of the key attributes of a mortgage is the rate, and you dont mention the rate or who the mortgage is with

Its also possible that 'something better' could be putting money into pensions rather than trying to pay off mortgage quicker. Again, depends on rates and what pensions you currently have and how much spare cash you have each month and your ages, and and and ......

tacpot12

Subject to all the above, yes, this is a good idea. You will know that you can pay the mortgage until it is cleared. I did this the last time I remortgaged.

getmore4less

Is there something better we should be considering?


lower rate and overpay

oellph

Doh! Current mortgage rate is 3.39%. A quick google gives a Barclays 10 year fixed at 2.59%, for a total repayable amount of £98k.

It feels like we're heading into uncertain territory over the next decade, what with Brexit, Trump and troubles in the EU, so I'd be happy to know my mortgage is always £814 per month for the next 10 years.

d70cw6

2.59% sounds like a freekishly high rate to be locked into for 10 years!

AnotherJoe

oellph wrote: »

Doh! Current mortgage rate is 3.39%. A quick google gives a Barclays 10 year fixed at 2.59%, for a total repayable amount of £98k.

It feels like we're heading into uncertain territory over the next decade, what with Brexit, Trump and troubles in the EU, so I'd be happy to know my mortgage is always £814 per month for the next 10 years.

No different to normal, think about all the uncertainties of the past 10 years.including really low base rates, Euro difficulties. The two you mention, brexit and trump, are more likely to lead to lower base rates.

Ten years is a long time, early repayment charges can be horrendous, you miss out on the opportunity to remortgage in say 3 or 5 years at a better LTV, you miss out on the flexibility that another poster mentioned, e.g. take a a lower rate and overpay if you can but if not, you aren't locked in to those higher payments.

And as I said, whilst people often look at mortgages in isolation there are also other considerations, the biggest long term one being pensions. Low rates give you the opportunity to save in your pension at a better rate instead, especially if you are high rate tax payers.

Only you can say how much the "certainty" of knowing your payments makes you feel and comparing that to the money you have lost in your pension, and certainly the money you will be at least initially, overpaying.

Make a start on the decision by looking at what rate could you get for say 3 years and how much a month would that save ?

erin110

AnotherJoe wrote: »

No different to normal, think about all the uncertainties of the past 10 years.including really low base rates, Euro difficulties. The two you mention, brexit and trump, are more likely to lead to lower base rates.

Ten years is a long time, early repayment charges can be horrendous, you miss out on the opportunity to remortgage in say 3 or 5 years at a better LTV, you miss out on the flexibility that another poster mentioned, e.g. take a a lower rate and overpay if you can but if not, you aren't locked in to those higher payments.

And as I said, whilst people often look at mortgages in isolation there are also other considerations, the biggest long term one being pensions. Low rates give you the opportunity to save in your pension at a better rate instead, especially if you are high rate tax payers.

Only you can say how much the "certainty" of knowing your payments makes you feel and comparing that to the money you have lost in your pension, and certainly the money you will be at least initially, overpaying.

Make a start on the decision by looking at what rate could you get for say 3 years and how much a month would that save ?

If you are doing it for peace of mind or to avoid the hassle of remortgaging every few years then it seems like a good idea. If you are doing it to be savvy you may want to think twice. I know many people who are currently a year or 2 into their 5 year fixed rates and are regretting it after trying to be savvy (including mortgage advisors). The extra money you are paying for a 10 year fixed could be spent on shortening your mortgage term. Play around with some figures and maybe speak to a broker.

getmore4less

LTV already under 50%, this is an end game play, not a starter.

best short(2y) term rates are around 1.5 this is 2.59.

£86k over 10y

2.59% £814.25pm £11710 interest
1.5% paying £814pm £6292 interest, paid off in 9.5years
2% would be £8676 interest. (9y9m)

Throw in some fees and the cost of the 10y might be within acceptable range for the certainty.

The 2x5y fix with 1 fee might be a compromise as the overpayment in the first leg will give a safety margin

spaceboy

d70cw6 wrote: »

2.59% sounds like a freekishly high rate to be locked into for 10 years!

Really? I can only get 2.73% for 5 years and that's with paying the product fee.

getmore4less

spaceboy wrote: »

Really? I can only get 2.73% for 5 years and that's with paying the product fee.

LTV makes a big difference.