The Added Benefits of Selecting a Long-term Mortgage Fix for Your Financial Freedom
For decades, two-year mortgage setups have been quite the norm for homeowners and real-estate investors alike. However, with the rise in interest rates, there has been a gradual preference for lengthier fixes.
New Base-rate Increase
Moreover, with the base rate being increased to 0.75% last week, it is highly likely that mortgage rates will follow suit as well. Hence, individuals that have a longer fix will be at a greater position.
That being said, deciding on the length of a fix is a game of risks in itself. One can aim to target a fix with a shorter term, but with the advantage of a lower interest rate. You will also have to accept the possibility that your rates will have increased by the time you remortgage.
Alternatively, you can opt for a longer fix which has a higher rate, but you will have the comfortability of knowing the rates that you will be paying through and through.
That being said, you might end up paying less or more depending on whether your current rates fluctuate during that 10-year period. Hence, it would be wise to carefully consider your options.
So here are the advantages of having a 10-year fix;
Avoid incurring extra fees in mortgage
The problem of switching in between fixes is that your fees can inadvertently add up. For example, if you select five two-year fixes running concurrently within a 10-year window, you’ll likely end up paying five times the fee! However, with a 10-year fix, you’ll incur significantly lower fees, which of course you’ll have to pay only once during that time period.
Avoid unwanted interest rates
It is predicted that base rate rises will be rising soon in the next couple of years, and hence, long-term fixes guarantee stability with your mortgage rates. Hence, even if interests make mortgage rates skyrocket, you can rest assured you’ll be safe during the uncertain climate.
Your current mortgage setup is safe from housing price fluctuations
One other advantage of long-term fixes is that they can give your house the much needed financial reprieve in case of price fluctuations. This goes especially if the current price of your house falls below the remortgage price, consequently causing the LTV to increase, rendering you unable to get access to the peak mortgage rates.
However, long-term fixes are unable to protect you from price fluctuations in the event that pricing on houses is on a steady incline.
Protection from shifting criteria of lenders
In the event that mortgage providers decide to become more stringent with their affordability structure, remortgaging can be a tedious affair. With long-term fixes, however, you are insulated against such an event.
You only get a single credit check
Whenever you apply for a mortgage, a credit check is performed. Hence, during the months prior to remortgaging, it is wise to not consider any other credit products to prevent your score from being affected.
Hence, if you’re doing short-term fixes, this is something that you’ll constantly have to look into whilst conducting your financial planning. In the event of a longer fix, you don’t have to worry about restricting yourself when it comes to credit.
More in Loans & Mortgages
Residents of Stockton, California to Receive $500 Monthly Stipend
Stockton infamously went bankrupt a couple of years back. Now, the tides seem to be changing. The city is set to...August 9, 2018
A Quick Look at Why Many Millennials are Not Homeowners
Millennials tend to tick all the right boxes when it comes to adapting to the times. However, homeownership has proven to...August 9, 2018
Johnson & Johnson Set to Cough Up $4.7 Billion in Damages
After reports were made that Johnson & Johnson’s talc products led to 22 women contracting ovarian cancer, the company has been...August 9, 2018
Starbucks Set to Ditch Disposable Plastic Straws by 2020
Coffeehouse chain, Starbucks, recently made an announcement about their plans to ditch disposable plastic straws by 2020. In doing so, the...August 9, 2018
Discover the Top-10 Most Stressful Jobs
The 9-5 routine can be quite stressful at times. High cortisol levels, the hormone responsible for stress reactions, are usually the...August 9, 2018
Tesla Stocks Plummet After CFRA Review
Last week, Tesla revealed that they had been able to meet their production target of 5,000 Model 3 automobiles. Despite the...August 9, 2018
Australian Suburbs Experiencing a Change in Listings
A recent research by CoreLogic has brought to light new information about Australian Suburbs that have been hardest hit by property...August 9, 2018
Double or Nothing: Netflix Scores Big
It’s safe to say that Netflix has had a fantastic year. The streaming company’s 107 percent shares increment is almost unprecedented...August 9, 2018
Digital Currency Sales Hit $13.7 Billion in Only 5 Months!
PwC’s strategy and consulting division, Strategy and Crypto Valley Association in Switzerland partnered together to release a report showing that digital...August 9, 2018