Bank of England rate hikes are driving more borrowers to consider fixing their mortgage for five years. Our new residential mortgage expert Neil Bishop of Mortgages to Business helps one of our readers understand more about the pros and cons of this option
The Question
I am due to remortgage on my house in October after taking out a two-year deal as a first-time buyer in 2020. I had a two-year fixed rate with Barclays.
I’ve heard, because interest rates have gone up, it’s a good idea to fix your mortgage for five years. Is this more expensive? I only ask as it seems a bit of a no-brainer – so what’s the catch?
Neil’s Answer
Fixing for a longer period gives you the peace of mind that your rate will not change for a while, which grants you financial security as you can budget for the long-term.
The differences between two and five-year fixed deals currently are minimal, so if you want the security of knowing what your payments will be for the longer term, the five-year deal is a good option.
However, when looking at the different options, it’s always worth considering your future plans, such as any potential house moves. If you were to move and leave a fixed deal early, you could end up paying high early repayment charges to cut the deal short, which could be a significant fee.
I recommend speaking to an experienced mortgage broker who can assess the different options with you.
Have you got a mortgage question for Neil?
There’s no such thing as a silly question when it comes to mortgages.
Whether you want to find out a bit more about what a mortgage is and how it can help you or you have a more specific question about your own application.
Maybe you want to know how much you can afford, what size deposit you need or what to do about your remortgage when interest rates keep rising – Neil can help. Send your question to kate.saines@emap.com
Neil Bishop is head of residential mortgages at Mortgages for Business. You can see his latest Q&A here.
