Mortgages: is it time to fix?
Ian Poysden, Managing Director of IEP Financial Ltd, on your mortgage: is it time to fix?
A mortgage is very often the largest financial commitment you will have. Whether you have a repayment or interest only mortgage, the certainty of knowing what your future outgoings can be very important. Ian Poysden looks at whether now is a good time to look at a fixed rate mortgage.
A few years ago most of us would have said no, opting instead for a cheaper, variable rate deal. But the tide has turned and we have witnessed a ‘race to the bottom’ by lenders with fixed rate mortgage deals as banks are taking advantage of cheap money courtesy of the Government’s Funding for Lending Scheme. I think that it is unlikely that fixed rate deals will fall much further and now may be a very good time to review the mortgage deal you have.
Lenders are enticing the less risky borrowers who have large deposits or equity with the best rates, but in general, for those looking for a higher loan to value percentage there are attractive options available too. Some of the best deals have five year fixed rates below 2.75%, and for those looking at two year deals the rates on offer go down to around 2.25%. Longer fixed terms are also available.
Base rates have been at an all-time low of 0.5% for over four years, but the money markets are suggesting we may see the first interest rate rise as soon as the summer of 2015. For anyone on a variable rate of 3%, an increase in rates of 1% would see mortgage repayments increase by 25%. For those with finances already stretched, this rise could make repayments potentially unaffordable.
One size does not fit all, and for some, the flexibility of a variable rate may be more attractive. As with all financial matters it is important to constantly review your commitments to ensure your financial plans and goals are on track.
Without a crystal ball there can be no guarantees over rates, but taking advantage of a financial health check at least once a year should always be a priority. With the potential benefit of increased security, protection and above all saving money, means there is really no reason not to.
If you would like a no obligation review please contact us on 01273 208813 or visit www.iepfinancial.co.uk. Alternatively, speak to your financial adviser or mortgage broker.
The above comments should not be taken as individual advice as everyone’s situation is different. IEP Financial Limited are authorised and regulated by the Financial Conduct Authority.
Ian Poysden is Managing Director of IEP Financial Ltd,
119 Church Road, Hove, BN3 2AF
Freephone: 0800 0436120
www.iepfinancial.co.uk
