Looking for a reliable repayment plan in a world of fluctuating interest rates? A fixed rate mortgage can fix the amount of interest you pay. Even for up to fifteen years.
But with such security comes a commitment, and with such a long fix you may find it difficult to move home or remortgage until your deal has run its course. Is a fifteen year fix for you?
What is a Fixed-Rate Mortgage?
A 15 year fixed-rate is a fairly rare mortgage product. With this you agree to a mortgage where the interest rate will remain the same for 15 years.
This means you’ll know exactly what you’ll repay each month over that time. But, it is difficult to move home during that period or remortage without having to pay hefty exit penalties.
Is a 15-year Fix Right for Me?
If you like the idea of facing no interest rate surprises for 15 years, and are confident you aren’t going to move house then a 15-year fix could be right for you. The main benefit of them is you don’t have to worry about interest rates and won’t have to pay the fees involved in remortgaging for many, many years.
But there are serious downsides. Can you be sure that your circumstances won’t change for 15 years? It is a very long time to commit to a mortgage deal.
Also, you won’t benefit from being able to remortgage to a better rate as you repay your mortgage and owe less.
The Pros and Cons of Fixing
Pros
Security. No matter what interest rates do over the next ten years your monthly repayments won’t be affected.
Forward planning. Budgeting for your future will be a lot easier if you know exactly what your mortgage is going to cost you over the next decade.
Save on fees. By not remortgaging for 10 years you will save hundreds, and possibly thousands of pounds in administration fees.
Pay less. If interest rates rise, you could end up making big savings compared to people with variable rate, or shorter fixed-rate, deals.
Cons
Expensive. A 15 year fix will tend to have a higher interest rate than other deals on the market, as you’ pay a premium for the lengthy locked-in rate.
No chance of falling payments. If interest rates fall you won’t see any benefit.
Locked in. If your circumstances change over you may have to pay hefty fees to get out of your mortgage deal.
