fixed term mortgages

Raz

Raz

Raz

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To all mortgage experts (and those who know more about mortgages than I do)!

I’ve a fairly basic question – can someone take out a 10-year mortgage on a 10 year fixed deal? If I were to take out say £150k for 10 years and lock it in a 10 year fixed mortgage deal would this be allowed? I realise payments would be somewhat high (~£1400 per month according to Barclays, plus CT and insurance would probably make it around 1700 per month) but it would obviously give certainty on monthly expenses for the whole term and get rid of the mortgage fairly quickly. Is this even allowed?

Also aware that there are many advantages and disadvantages to being locked into a 10 year deal…
 
Yorkshire bank do a 10 year fixed offset mortgage.

So you pay the mortgage at whatever rate you want (say over 20 years), and overpay into one of the linked offset accounts. This way you don't pay any extra interest as the overpayments offset the interest, and at the end of the 10 year term, you have the remaining balance sitting in the offset account. When the deal runs out, and no overpayment penalty applies, just pay off the remainder. Job done.

The bonus with this method is no extra interest charges, but with instant access to the overpayment funds as they are really just sitting in a current account. But you are not paying interest on that amount.
 
[FnG]magnolia;26767565 said:
Few banks will offer that deal at a palatable rate, if at all.
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I don't see why they couldn't in theory - current 10 yr swap rate is just above 2.5%, the 5 yr swap rate is around 2%... some people, such as the OP, might want to pay the extra 50bps...
 
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[FnG]magnolia;26767592 said:
Penalties would be the main reason but tis a small mortgage so might not be important.
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they do seem quite a high %.

Anyway, the thing is that while it would be far cheaper monthly to say get a 20 or 25 year mortgage I'm more interested in getting rid of it as fast as possible - and if that means paying extra per month then so be it.

I just wonder if it's possible to do something like this (i.e. 10 year mortgage and a 10 year fixed deal so you know exactly what you pay over the life of the mortgage)
 
My comments were based on the NZ market which is very different to the UK as our interest rates are markedly higher right now. If I were you, I'd speak to a broker and explain exactly what you've written above (well, I wouldn't because I work for a bank but you know...)
 
Yes you can do this and if I was taking out a mortgage today I'd definitely consider a 10 year fix. When I looked the other day best option seemed to be 3.99% from Barclays/Woolwich although fee was very steep (£1500 or summat).
 
HangTime said:
Yes you can do this and if I was taking out a mortgage today I'd definitely consider a 10 year fix. When I looked the other day best option seemed to be 3.99% from Barclays/Woolwich although fee was very steep (£1500 or summat).
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Considering a lot of competitive products have ~£1k for 2-5yr deals, £1500 over 10yr seems ok.

I've just gone for a 5yr fixed at 3.39% which I think is ok (not great, but ok).
 
Fair point, I guess I just got a shock because fees used to be a lot lower (my current mortgage didn't have any fees). I suppose with house prices hitting record highs as well the impact of a high fee is relatively smaller than in used to be (i.e. the more you borrow, the less it matters in comparison to the interest rate).
 
The option to overpay up to 10% a year will probably help you, then you can bring the balance down over time. Most lenders only apply a penalty during the promotional or fixed period. You should be fine over 10 years.
 
There's little point in fixing your mortgage during the last few years, as the interest element will be a very small proportion of your repayments regardless of the rate.
 
cheesyboy said:
There's little point in fixing your mortgage during the last few years, as the interest element will be a very small proportion of your repayments regardless of the rate.
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Do you mean there has been little point i.e. not worthwhile over the past few years due to a lack of change in the underlying rates or are you saying you think there is little point in fixing the rate going forwards as well. If the latter then I'd have thought the rumblings from the Bank of England about the base rate over the next couple of years should be factored in although it does depend somewhat on what you bet on as the timeframe for any adjustments.
 
I think it depends on what your priority/reasoning for wanting a fixed product is - avoiding volatility of payments (in which case what you say is true i.e. variable rates won't impact monthly repayments as much as they would with a longer term), or simply saving money (in which case a fixed mortgage may still be beneficial).
 
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