If all else is equal..

MoneySavingAlly

If all else is equal...
..Would you go for a 5 year fix versus a 10 year fix if the interest rate of the 10 year is 0.5% higher

[Deleted User]

Personally no.  I have had too many people over the last 12 months wanting to move but their lender has changed policy on income or anything else.   Just had someone this week have to pay a £14k erc on a 10 year nationwide deal as they wont take overtime at the moment so wont agree to port the mortgage.   Ultimately it is their choice to move house now so they are paying it but it is too big a risk for me personally.   I didnt set up that 10yr deal thankfully. 

Coventry used to do (might still do them, havent checked in a while) a 10 year fix with erc for the first 5 years.  That seems ok to me but 10 years is a long time to commit for.  

RelievedSheff

I personally wouldn't. 10 years is a long time to be fixed into one mortgage.

MoneySavingAlly

RelievedSheff said:

I personally wouldn't. 10 years is a long time to be fixed into one mortgage.

Why is it a long time?  Does it depend on what you think the future rates will be?

MoneySavingAlly

Deleted_User said:

Personally no.  I have had too many people over the last 12 months wanting to move but their lender has changed policy on income or anything else.   Just had someone this week have to pay a £14k erc on a 10 year nationwide deal as they wont take overtime at the moment so wont agree to port the mortgage.   Ultimately it is their choice to move house now so they are paying it but it is too big a risk for me personally.   I didnt set up that 10yr deal thankfully. 

Coventry used to do (might still do them, havent checked in a while) a 10 year fix with erc for the first 5 years.  That seems ok to me but 10 years is a long time to commit for.  

What about if the mortgage is small (50k) and you know with certainity you won't be moving ever again.

[Deleted User]

you can drive yourself insane looking for every saving in every situation.   £50k on 0.5% interest difference works out at like £20 a month.   If thats an amount you are happy to pay extra for the security and lack of hassle of having to look at your mortgage again then go for it. 

K_S

Deleted_User said:

Personally no.  I have had too many people over the last 12 months wanting to move but their lender has changed policy on income or anything else. Just had someone this week have to pay a £14k erc on a 10 year nationwide deal as they wont take overtime at the moment so wont agree to port the mortgage.   Ultimately it is their choice to move house now so they are paying it but it is too big a risk for me personally.   I didnt set up that 10yr deal thankfully.

@Deleted_User Similar experience here. The amount of money that mainstream lenders make from ERCs on long fixes must easily comprise a significant part of their profits. I wince when I see the ERC terms of some of the high-LTV 5 year fixes that lenders have opportunistically come out with since covid, some of them with a 5% ERC until the very last day of the fix. The better ones at least have sliding scales. Generally speaking, clients sometimes put too much faith in being able to port and underestimate their chances of life-events during the period of the fix.

RelievedSheff

MoneySavingAlly said:

RelievedSheff said:

I personally wouldn't. 10 years is a long time to be fixed into one mortgage.

Why is it a long time?  Does it depend on what you think the future rates will be?

No. I just think that a decade is a long time to be tied into one product. A lot can change in that amount of time.

RelievedSheff

MoneySavingAlly said:

Deleted_User said:

Personally no.  I have had too many people over the last 12 months wanting to move but their lender has changed policy on income or anything else.   Just had someone this week have to pay a £14k erc on a 10 year nationwide deal as they wont take overtime at the moment so wont agree to port the mortgage.   Ultimately it is their choice to move house now so they are paying it but it is too big a risk for me personally.   I didnt set up that 10yr deal thankfully. 

Coventry used to do (might still do them, havent checked in a while) a 10 year fix with erc for the first 5 years.  That seems ok to me but 10 years is a long time to commit for.  

What about if the mortgage is small (50k) and you know with certainity you won't be moving ever again.

I would pay it off over a much shorter term than 10 years for a start.

Mobeer

Heavily depends upon the Early Repayment Charge and whether this is a "forever dream house" or not.

MFWannabe

MoneySavingAlly said:

Deleted_User said:

Personally no.  I have had too many people over the last 12 months wanting to move but their lender has changed policy on income or anything else.   Just had someone this week have to pay a £14k erc on a 10 year nationwide deal as they wont take overtime at the moment so wont agree to port the mortgage.   Ultimately it is their choice to move house now so they are paying it but it is too big a risk for me personally.   I didnt set up that 10yr deal thankfully. 

Coventry used to do (might still do them, havent checked in a while) a 10 year fix with erc for the first 5 years.  That seems ok to me but 10 years is a long time to commit for.  

What about if the mortgage is small (50k) and you know with certainity you won't be moving ever again.

I’d be even less likely to take a 10 year mortgage with £50 left to pay as with overpayments I could clear it in less than 10
i wouldn’t tie into 10 anyway; too much can change in that time