How long should I fix my mortgage deal for?

9th July 2019

Woman thinking

If you’re looking for the best fixed-term mortgage deal, the first thing you need to decide is how long you want to fix your mortgage for.

It’s really important to get a mortgage that suits both your financial and personal circumstances.

Here are some pointers to help you get it right.

What’s an initial period?

Some people get confused between a ‘mortgage term’ and an ‘initial period’.

A mortgage term is the entire length of your mortgage, for example 25 years.

An initial period refers to the length of your mortgage deal, such as two years.

Fixed-rate mortgages and discounted variable-rate mortgages both have initial periods.

How long can I fix my mortgage deal for?

Fixed-rate mortgages usually last two, three, five or 10 years.

Discounted variable-rate mortgage deals often last between two to five years.

How many years would suit me best?

If you plan to stay in your home for a short amount of time before selling it, or you’re expecting changes to your financial situation, a short-term deal for two or three years may suit you.

Shorter deals tend to have the lowest total cost over the initial period (known as the true cost).

If you think you’re going to stay in your home for longer, and aren’t expecting changes to your circumstances, a five-year deal may be worth considering.

You’ll get extra long security with a 10-year fixed mortgage. But while you’ll be protected from potential interest rate rises, you could also miss out on lower mortgage repayments if interest rates go down.

If your circumstances change, and you want to come out of the deal before it ends, you could face high charges.

Should I get some advice?

Before deciding how long to fix your mortgage deal for, it’s a really good idea to have a frank conversation with a mortgage broker.

Things to discuss include:

  • how long you plan to stay in your home

  • if you plan to buy a cheaper or more expensive home when you sell up

  • any future pay rises, bonuses or inheritances

  • plans to marry, start a family or buy with a partner

Having a transparent chat with a mortgage broker will help decide the length of the initial period that’s right for you. It’s really important to get it right as many deals have early repayment charges if you later decide to pay off your mortgage early.

Bear in mind: Your home could be repossessed if you don't keep up repayments on your mortgage.

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