5 year or 10 year fixed mortgage?

SouthLondonUser

Two issues:

1) What if you need to move before the 10 years? Life is unpredictable and very few people can be certain they won't need to. Most mortgages are portable, ie the bank will let you cancel this mortgage and take out a new one, waiving the repayment fee. But this requires you to buy and sell at the same time - it doesn't work if you want (or need to, to break the chain) to sell, rent for a while then buy, or if the bank changes its criteria and you no longer qualify

2) Cost: fixing for longer is like an insurance against rates going up. Like any insurance, it costs money. Only you can know how much this piece of mind is worth to you - just don't forget this piece of mind is expensive.

NameUnavailable

I have a 10 year deal without penalties after 5 years. Worth speaking to a broker to see what is out there.

fewcloudy

johnnytee said:

...But I have been advised against this as I was told it may cause problems in the future if I want to move house and I don't understand why. 

Advised by who, a professional mortgage broker/adviser? a friend?

Either way I would be asking them to explain it again if you do not understand something.

But others have already stated some obvious potential pitfalls.

MaryNB

johnnytee said:

Hi,

First-time buyer, new to all this! But thinking of fixing the interest rate on my mortgage because I fear they will go up in the future, if they don't stay where they are. It seems logical to fix for 10 years for peace of mind, rather than fixing for 5 and then finding the interest rates at that point are much higher. But I have been advised against this as I was told it may cause problems in the future if I want to move house and I don't understand why. They said to go for a 5-year one instead. Do you have any thoughts on potential pitfalls of a 10-year fix, as opposed to a 5-year one? Any help really appreciated! Many thanks in advance.

My mortgage illustration says I have no right to port my mortgage during the five year term (doesn't say I can't, just says I don't have the right to). Say after 2 years my circumstances change and I want to move house. The house I want to buy has structural issues, or I'm earning significantly less. My bank may not let me port my mortgage.  In my case I'd have to pay an ERC of 3%, which would equate to more more than £4,000 based on my predicted balance in year 3, to be released from the fixed term. 

saajan_12

SouthLondonUser said:

2) Cost: fixing for longer is like an insurance against rates going up. Like any insurance, it costs money. Only you can know how much this piece of mind is worth to you - just don't forget this piece of mind is expensive.

Sort of.. its a fix not an option though, so if the cost of insurance against rates going up is (partly) offset by the premium you're paying in case rates go down.