Political turmoil and economic uncertainty are key features of UK life right now. So, how are homeowners and buyers ensuring their financial stability? The short answer is they are signing up to ever-longer fixed-term mortgage deals to ensure they know exactly how much they will be repaying monthly for the next 15 years. Recent reports suggest the number of 15-year fixed-term loans coming on to the lending market are rising, with Virgin Money and Yorkshire Bank the latest big names in lending to offer the longest fixed-rate to its borrowers.
Certainty in repayments
There are obviously pros and cons to borrowing on a long-term fixed rate, something that is much more common in continental Europe than in the UK. The pros are ensuring your repayments won’t change and that you will not be affected adversely if interest rates suddenly rocket. Current lending interest rates are at a historic low, but the uncertainty over Brexit and the UK’s future outside of the EU points to more turbulent financial times ahead. The obvious cons to agreeing to a 15-year fixed-rate deal is that if interest rates were to fall, you’d be left paying much more than you need to, while – if your financial circumstances do change – having to pay a hefty exit penalty to get out of the deal.
‘Price worth paying’
Speaking to the Observer about the trend, David Hollingworth of London and Country Mortgages, said: “Longer-term fixed rates do carry higher interest rates than their shorter-term counterparts so there is a cost for long-term stability. “That price may well be worth paying, of course, if rates rise in future but will inevitably cause borrowers to consider whether they opt for a lower rate now and review in the future.”
Homeward Legal has conveyancing answers
Whether you’re a homeowner deciding to remortgage on to a long-term deal or a home buyer keen to secure your repayments, you need top-quality conveyancing services. Homeward Legal works with a nationwide panel of conveyancing solicitors, all of whom are also on the approved lenders’ panel, meaning they can go to work on your behalf immediately to secure your remortgaging or property purchase. Talk to our team now on 0800 038 6699 – we’re open seven days. You can also get an instant, no-obligation quote for conveyancing services that comes with our No Completion Protection that means you won’t lose out if, for any reason, your transaction does not complete.