5 or 10 year fix? With interest rates going up

22225

Hello
Sorry if this has been done to death. We are hoping to upside soon into our long term/forever family home (well, we intend it to be). We have a decision in principle based on a 5 year fix. The mortgage advisor was very negative about 10 year fixes, and put me off, saying so much can happen in 10 years, the ERC would be terrible if we had to sell up at  etc.
I understand that 10 year fixes are more expensive than 5 year fixes. But I'm still thinking should we try to get a 10 year fix, because I'm really worried that interest rates are going to really shoot up and we wont be a to afford the repayments. The mortgage would be for about £300k. I think it would be hard for us to repay it if rates went up to 4.5% etc.
All our family live near us including my husbands step daughter so I dont envisage us moving. The kids are in local schools etc.

Can people please give me their opinions on fixing for 10 years. Thank you. 

K_S

@22225 I can't comment on your specific case or guess the direction that interest rates will take in the coming years. Your guess is as good as mine.

But generally speaking if you're extremely worried about interest rates rising, don't see any reason that you may need to move home, and are happy to accept potentially hefty ERCs and a higher interest rate at the outset, then a 10 year (or even a flexible lifetime fix which waives ERCs in certain scenarios) might be something to look at.

22225

Thank you very much 

Thrugelmir

If the product is portable. Then moving home poses no particular issues. 

nicknameless

If you can't afford 4.5% can you really afford that mortgage long term?  Happy New year BTW.

getmore4less

There are 10y fixes with 5y ERC.

Which lender is the 5y with.
What rate
What term
LTV

If you are a rates are going up person and may struggle look at longer term and overpayments to give some wiggle room.

K_S

@22225 As you can see, there are plenty of products in the market to tick your boxes outside a vanilla 10 year fix. Perhaps have a proper conversation with your broker and emphasise your priorities so they can come up with a few creative options.

Tbh if you're only at the starting-to-view stage, you could park this until you have an offer accepted and are ready to put in a full application. The DIP doesn't commit you to a 5 year fix.

Do remember that you will likely pay an interest rate premium for a long fix and more if it comes with flexible options (such a 10 year fix 5 year ERC, or lifetime fix with flexible exits, etc.).

HNY and good luck!

22225

Thanks all. I didnt realise non-vanilla 10 year fixes existed. You learn so much on this forum. Thank you.