Generally, you’ll find that the longer that you fix your mortgage for, the higher your interest rate is going to be. This is why you should look for a shorter fixed term, so that you can access lower rates.
Even though short term fixes could eventually save you money, your mortgage will need to be regularly reviewed and renewed more frequently. When it comes to your remortgage in Sheffield, it can depend on how the economy is performing and what sort of deals of available to what sort of rate you’ll pay on your new product.
Sometimes, you may end up paying more than your previous months’ mortgage payments, and then sometimes you may end up paying less.
If you would prefer to fix your rate for a longer period, you can take out a medium to long term fixed mortgage if you want to.
The most popular fixed rates are 5-year terms. These deals are sort of in the middle, not too short nor too long. They also add the security of constant monthly payments for the foreseeable future.
The only negative to fixing into a 5-year term is that your overall payments may be more than if you were to had fixed a 2-year product and then a 3-year product, but not by much.
If you wanted to go even further and try and secure a 7 to 10-year fixed-rate product, you may need to try and access specialist lenders as there are a limited number of these products on the market. They aren’t the most popular of choices amongst home buyers and owners, due to the length of the term. You won’t get much flexibility with a mortgage in the long term; they may also come with expensive setup fees and rates.
In addition to interest rates and monthly mortgage payments, you’ll also have to consider booking and arrangement fees. A booking fee will be charged upfront and an arrangement fee will be charged at completion. Sometimes these fees can be incorporated into your mortgage payments, however, this can increase the total amount paid in the end.
If you’ve got the funds in place to do so, you may want to pay off a chunk of your mortgage early. Usually, people do this after they’ve received a large lump sum of money for something.
If you do this, you may be charged with an ERC or otherwise known as an early repayment charge. You are tied into a deal for a set period of time, so jumping out of the deal early will cost you. You can continue with repaying early if you are okay with paying the ERC.
An ERC is calculated as a percentage of the amount that is still owed on the whole mortgage, not your term. For example, if you have £200,000 left on your mortgage, you may get an ERC of 2% which is £4,000. If a current deal is available on the market that you want to access, it may benefit you more to take the ERC and remortgage early.
As a mortgage broker in Sheffield, we would recommend not chasing after ‘headline’ deals. You need to remember that the deals with the lowest rates come with the highest arrangement/setup fees.
For remortgage advice in Sheffield, please contact us today. We have helped 1000s of customers fix excellent mortgage rates in the past, and you could be next!
Get in touch for a free mortgage review today.