Fix Your Mortgage Now If You Can

If you are on a variable rate, you ought to fix your mortgage now, whilst rates are still low and before they go up – which seems inevitable.

There is still some record low rate mortgage deals around. For example, there is a five-year fixed rate at 1.65% available as I write this, but with real inflationary pressures breaking out everywhere, these rates will not last long and fixing on a good low rate fix seems a smart move to me.

It seems nailed on that interest rates will have to rise very soon.

Already, so called “swap rates” – which bankers trade on to fix their own costs – are trending up. The 10-year swap has risen from 0.36% in December 2020 to 1.31% now.

By the end of 2022, most commentators expect Bank of England Base Rate to be at least 0.75%, still historically low, but back up to pre-Convid levels.

How long to fix for will depend on how long you will have the property for – what your long-term objectives are. All fixes come with penalties if you want to close the mortgage early, so you need to know your long-term plans.

How long to fix a mortgage for?

I am not planning to sell my properties any time soon, so have always plumped for five-year fixed rate deals. They come at higher interest rates than two-year fixed rate deals, but of course, there is no need to have to re-mortgage again in 2 years’ time, pay another fee and produce all the voluminous sheaves of paperwork that your new lender will require. And chances are that it will mean a new lender, because the best rates are always reserved for new customers. A lot of hassle. So, I would prefer to set for a five-year term and then forget about it.

Most fixed term mortgage loans will allow you to pay off 10% of the mortgage amount outstanding each year. But do check this. Not all will allow it.

Quite a lot of my variable rate loans are on good very old Bank of England Tracker rates which I took out pre the 2008 financial crash. Lenders do not tend to do these anymore, after they ended up losing a lot of money on them due to the crash.

These will inevitably go up too as the Bank of England raises its base rate but given that they are at such low margins over the base rate, I may leave them alone and not move them to fixed term deals.

But if you have any tracker or other variable mortgages where the interest rate is set at more than say 2 or 2.25% over the base rate, maybe now is a good time to fix them too?

Do not hang about though. The good deals will not last.

ABOUT LETTINGFOCUS

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk. Our advice is completely independent.

Services to Businesses, Charities and the Public Sector

We advise a range of organisations too – public, charities and private – to help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

IN THE MEDIA: Recent Press Coverage

BOOKS:

“SUCCESSFUL PROPERTY LETTING”:

Our book is the highest selling personal finance and property book in the UK. Click here to Find Out More and Buy it. And if you are from an organisation and would like to bulk buy, please ask us for special rates.

“BUY TO LET LANDLORDS GUIDE TO FINDING GREAT TENANTS”:

Also, get this great new guide here, which covers everything you’ll ever need to know to avoid either you or your letting agent getting anyone other than the perfect tenant. Click Here to Buy It.

BOOK FOR TENANTS:

Kids going off and renting for the first time? My Book for Tenants is also Available

TO JOIN OUR FREE NEWSLETTER MAILER which goes to over 3,980 people (as at Dec 2020) just send an email to [email protected]

We do not send spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS: Landlords Resources

PERUSE LAST TEN BLOGS BY GETTING THE RSS FEED: Click Here

NEXT ANNUAL SEMINAR EVENT FOR LANDLORDS: Landlord and Property Letting Seminar

TWITTER PAGE My thoughts on property, personal finance, music that I like, sport, Corona Hysteria plus a lot of other random things: Twitter 

COPYRIGHT: DAVID LAWRENSON

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.