would it be sensible to take out 10yr fixed now?

henry123_2

Moving house for child startiing school next Sept08, best guess would be stay there 7 years ready for next move if local secondary school doesn't improve.

Would taking out a 10yr fixed at 5.98% be a reasonable thing to do?

Or would it be better to go for just a 5yr at the same rate?

Thinking of interest only and either paying off regular monthly amounts of aroounf £200 depending on time of year.

Does paying into a tax free saving higher than 5.98% mean it's better to save than pay off mortgage?

homer_j_3

if you are tied in for 10 years but know there is a good chance you will need to move in 7 years, I would say that you should look for a 7 year fix or 5yr and then do a 2yr or a 2yr and then 5yr depending on your outlook on interest rates.

IHateDida

We've just taken out a 10 year fixed at 5.57% (Woolwich) - don't know if we will stay here 10 years but I'd rather have the security in knowing my payments for the next 10 years. Depends on your position really.

MarkyMarkD

I agree with homer_j.

Portability on mortgages is a dubious thing - I would never take a mortgage which tied you in longer than you expect to live in a property, unless you are absolutely 1000% certain that nothing about your financial situation will change adversely.

And with what's happened to Northern Rock, how good would it be to be forced (financially) to port your mortgage with a lender when their new business products might become completely rubbish because they are no longer able to fund new lending? You might end up with a top-up mortgage at a ridiculous rate.

henry123_2

the woolwich is now 5.59% but looks tempting, fees are a bit pricey and they want a 6% early repayment charge!!

But.

I don't want to be coming to the end of a 5yr fixed with the chance rates could be up higher and rising and unable to secure a new 2yr or 5 yr at the orginal 5.59%

After 10yrs I would hope that I have halved the mortgage so won't be too worried about rates being much higher (or too gutted if they are at an all time low)

MortgagesInc

The reason for Homer suggesting the 5/2 yr option was that if you need to borrow more money for your new property in 7 years time, you are restricted to using your current lender, who may not be competitive at that time. If you are out of any redemption penalties then you have thre freedom to find the best lender for your situation when you come to move. Woolwich are actually reducing their 2 and 5 year fixed rates tomorrow to 5.59% - the same as the 10 year.

Spangled

Halifax are doing a ten-year fix at 5.99% - pricier than the Woolwich but ERCs only for the first five years, so you're free to remortgage after five years at no penalty:

http://halifax.co.uk/mortgages/fixedswitch1to25yr.asp

That may give you the security AND flexibility you're after. If IRs have tumbled after five years you just remortgage. If they've shot up, you just stay on the fix for another five years.

Most of their long-fix mortgages have a maximum of 10 years of ERCs. So you could fix for 25 years but only have ERCs in the first 10. See the above link.