Fixed Mortgages Are Getting Longer - 15 Years At 4.99% Is A Great Deal
October 2006
We've spoken at length before about the advantages of fixed rate mortgages for many people - See this article Long Term Fixed Mortgages Protect Your Financial Downside - Find Out Why.
Longer term fixed rate mortgages are all about protecting your downside risk.
With a floating rate mortgage if interest rates were to fall 3% over the next year most mortgage holders would be quids in, paying considerably less money per month. But if rates were to rise by 3%, 4% or even more over the coming years you can bet that many would struggle to make their monthly payments. In fact we’d suggest that a lot of people would have their homes repossessed.
The upside (falling rates, less money to pay) will always look after itself so it’s the downside that mortgage holders should concentrate on. And locking in a fixed interest rate with a fixed rate mortgage for many people must be something to at least look into from a personal budgeting point of view.
A 2 Year Fixed Rate Deal Is Not What We Mean
Most of the fixed rate mortgages on offer today are for a paltry 2 years which is really nothing more than a marketing gimmick by the financial institutions. A proper fixed rate mortgage is really going to be something like 10 years.
But the Stroud & Swindon Building Society’s is now offering a very competitive 15 year fixed deal –
- Rate is fixed at 4.99% for 15 years
- Early repayment penalties for the first 10 years (always look into this kind of small print with a magnifying glass)
- But you are able to pay off up to 25% of the original loan at anytime without a penalty
- Maximum loan value is 90%
- First time buyers are offered up to a £1million loan, but if you’re looking to remortgage only £500k is offered as the maximum
- Fees are relatively hefty at around £900 but the deal offers free valuation, and for remortgages free legal work
- The mortgage is portable so if you were to move it can finance the new property
Summary
In our mind those looking to fix a mortgage should consider at least 10 years because it's all about budgeting your finances for the long term. 15 years for many people should also be looked at and considered and right now this deal from Stroud & Swindon looks competitive.
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