It’s now less than ten weeks until the UK leaves the EU. With all the current indications pointing towards a ‘no deal’ departure and many key questions around the economic impact of such a scenario still unanswered, many consumers are considering how to ‘Brexit proof’ their personal finances.
Of course, one way of doing this is by fixing your mortgage, which is normally the biggest point of monthly household expenditure. Ensuring that your mortgage payment is fixed for the foreseeable future can make it easier to budget. But how long could, or indeed should, you fix your mortgage for?
Many of our clients are already aware that 2-year fixed rate products tend to be the most cost effective, although recently 5-year deals from many lenders have been reduced to the point that they are nearly as competitive.
But did you know that you can fix for 10 years? Or, if you wanted to, 15 years? That’s right, some lenders will allow you to fix your mortgage until 2029 or even 2034. Feels like a lifetime away, right?
But here’s the thing; for those who are in secure employment and are living in their ‘forever home’ with no intention of moving for the next decade – or longer – by fixing their mortgage now, it’s possible to enjoy the peace of mind that comes with being able to plan their finances for the long term.
We’ve seen a rise in the number of clients over the past couple of months who, having moved into a family home to ensure that their children live in a catchment area for certain schools, are absolutely committed to not moving again for many years. Which means for them, it makes sense to look at locking their rate down for a much longer period.
There are of course multiple factors to consider with a fixed product of any term. Aside from whether you may need to move in the near future, it’s also important to think about whether you might want to remortgage during the term of the product too. That’s because many lenders will impose Early Repayment Charges if you make any changes to your mortgage during the life of a fixed term product.
Having said that, Early Repayment Charges on the ultra-long fixed products, such as 10 and 15 years, do vary. Some lenders will only levy Early Repayment Charges in the first 5 years of a 10-year fix as well as offering options to port your mortgage should you need to move home within the lifetime of the product.
This is where the advice of one of our expert advisers is so critical. Because, if you do decide that you’d like the long-term security of a fixed rate product, they’ll review the market for you to find the right product to suit your needs and circumstances.
So, whilst the headlines may give cause for concern at the moment, there are at least ways you can take your stress out of your mortgage payment in the lead up to Brexit. Stockpiling baked beans and teabags is entirely optional…