Hi i have plans to buy my first home and wondering about he fixed term for a mortgage.
After the fixed term is over, i hear that i would be moved onto the variable rate afterwords(from what the mortgage in principle outlined) . My question is, can you switch to a different lender after the term is done or am i stuck with the same lender for the entire length of the mortgage?
Remember if you lock-in, then leaving - i.e. selling and going back to rental; you'll have to pay early resettlement fees.
Also note if your fix rate is relatively poor (because your LTV is in the 81-95% range) then consider that if you pay for 2 years you may nudge yourself into a lower LTV and therefore have better rates available.
The gamble I wish I knew I had made - I locked in at 2.34% at 95% LTV - but 3 years in I am now at 80% LTV due to repayments and market valuation increasing a decent chunk.
Realistically I knew the property would go up but I had assumed the world was going to end - hence locking in. However, now I can afford an upgrade - I am facing an £8k settlement fee, or port my existing mortgage and then get another mortgage for the difference. Basically my gamble has cost me about £5k if I do nothing and pray interest rates stay the same, or £8k if I clear the mortgage and take an entirely new one at a lower rate.
Moral is - if you think you are going to move, or you think the property will increase in value, do consider how long you want the fix for.