Fixing for longer than outstanding term

Burnley_Lad

Is it possible to choose a fixed rate product that is longer than the outstanding term of a mortgage?

Thanks 😊 

MovingForwards

What would it be fixed to after the mortgage is paid off?

Snookie12cat

Burnley_Lad said:

Is it possible to choose a fixed rate product that is longer than the outstanding term of a mortgage?

Thanks 😊 

Seems quite unlikely. Why would you need to fix it for longer than the selected term? 

Burnley_Lad

Thanks both for your replies.

Looking at my options, I can fix for 5 years and have uncertainty for the remaining two years of the mortgage (and more than likely pay a higher rate than what I can fix for now), or fix for 10 years at the same rate and have certainty in what rate I will be paying for the rest of the mortgage.

Thrugelmir

The product cannot exceed the remaining contractual term of the mortgage. 

Burnley_Lad

Thanks for your reply.

Snookie12cat

Why don't you extend the term to 10 years but over pay so it's paid off in 7?

MovingForwards

Take the 5 year fix and overpay to clear it within that term.

getmore4less

By year 5 the amount owing will be a lot lower so the increased rate on a small amount could well be less than the increased amount on the higher rate for the previous 5 years.

Pretty easy to calculate.

getmore4less

Take a nationwide retention best rates on 5y, 10y to be paid off in 7y
1.99% and 2.09%.

on £50k paying £640pm

Mortgage	£50,000
payment	£640	ERC/FEE
rate	1.99%	£0
new rate	2.09%	£0
Time	Years	months
Left on current	5	0
New fix term	7	0
amount left after(months)		60
Start	rate	End
£50,000	1.99%	£14,886
£50,000	2.09%	£15,062
amount left after(months)		84
£50,000	1.99%	-£166
£50,000	2.09%	£32
Switch when ERC £0
Break even rate needed no fee and fee)		24
£14,886	3.223%	£32

Get it wrong and it won't cost a lot(left after 7y) even if rates went to 6% its only ~£500(before any overpayments).

£14,886	2.00%	-£165
£14,886	3.00%	-£4
£14,886	4.00%	£160
£14,886	5.00%	£329
£14,886	6.00%	£503