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Original poster

Would you take a 15 year mortgage?

18 replies

FridayFunday · 08/08/2019 13:28

We are remortgaging at the moment and have been offered a 15 year fix. I like the idea of certainty through the potential post Brexit chaos, but are there any disadvantages? Can’t help thinking that the bank wouldn’t be offering the product if they felt borrowers were going to win in the long term! WWYD?

OP posts:

wangxiaosara · 08/08/2019 13:32

what is the rate for 15 years fix? I am on 10 year fixed rate is 2.49%.

JoJoSM2 · 08/08/2019 13:34

The rate is probably high?

TeenTimesTwo · 08/08/2019 13:34

The disadvantage is that long term interest rates may be lower than the rate you fix at, so you lose out compared with a different mortgage.

It's all a bet/gamble though isn't it?

You have long term security but you might end up paying over the odds.

Are there exit penalties? If rates go up a lot do they have a get-out clause for themselves?

NoBaggyPants · 08/08/2019 13:40

Is it with Virgin? The ERC is very high, is there any chance of you wanting to sell (and not port the mortgage) or pay off your mortgage early?

Original poster

FridayFunday · 08/08/2019 13:41

Thanks for replies- it’s 2.55% and the repayments would be just £5 per month higher than we currently pay. Will rates realistically go much lower? It does have hefty redemption penalties but is portable if we move.

OP posts:

HollowTalk · 08/08/2019 13:42

I would definitely go for that. It's not going to get lower, is it?

Nearlyalmost50 · 08/08/2019 13:44

I have taken a 10 year fix. Even if I pay a bit more now, I want the certainty of knowing my repayments and that Brexit can't stuff it up entirely!

INeedNewShoes · 08/08/2019 13:45

If there's any chance you'll want to move in the next 15 years you'd be shooting yourself in the foot.

Even mortgage products advertised as portable have been found very difficult to actually port when it comes to it so you'd most likely end up paying a hefty early repayment charge which I'm guessing is where the banks make their money on long fixes.

verticality · 08/08/2019 13:47

It's all about your attitude to risk and your financial situation. 2.5% is a good deal if you would struggle at 6% or something and if you're a worrier. If you would be fine albeit a bit annoyed at 6% then a cheaper flexible deal may have value. Perhaps work out what a difference that extra 1% makes to the overall payments over 15 years - and then work out if you're willing to pay that for peace of mind.

People have been predicting that interest rates will rise since I got my first mortgage in 2004. They haven't - and I can see the Bank of England holding them artificially low for a while when the chaos of Brexit hits. As with austerity, they will be desperate to protect their middle class voting base, even if it means throwing the poorer and more vulnerable to the wolves.

Original poster

FridayFunday · 08/08/2019 13:53

We will not be paying it off in the next 15 years (have a massive mortgage!) but may want to move. Why would it be difficult to move if advertised as portable? That is a concern. I am a worrier so the certainty would be good, but I don’t want to pay a fortune to ease unnecessary worrying.

OP posts:

leghairdontcare · 08/08/2019 13:54

Hm, we took a 10 year fix last year at 2.49%. Similar to you, I wanted the long term security due to brexit. We have a relatively low balance on our mortgage and part of it was not wanting to pay any fees for remortgaging. We should be in a position to pay off the remaining balance when the fix ends. If our mortgage was higher, I probably wouldn't have fixed for so long as it would be worth going for 5 and getting a lower interest rate.

2cats2many · 08/08/2019 13:55

I'd do it. Historically that's still really low.

Notreallyhappy · 08/08/2019 14:00

Yes...rates arent going to go down....if you know In your plans you can afford these repayments you wont have to worry if Brexit goes bang..

INeedNewShoes · 08/08/2019 14:07

I can't remember where I read it but one of the things that makes porting difficult is if the new property is worth more than your current one (and it can also be a problem if the new property is worth less as it can change the LTV).

fromdownwest · 08/08/2019 14:35

Rates are low - BUT think of the ERP's, I was going to fix for 10 years, I am glad I didn't as now divorced and it would have cost us tens of thousands to repay the erps on sale of family home

stucknoue · 08/08/2019 16:19

If the price is right yes but check the charges if you need to change/repay early

grumiosmum · 08/08/2019 16:21

I'm old enough to remember when mortgage rates were 15%, so while they are unlikely to go that high again, i think 2.55% seems relatively cheap.

Can you make overpayments without a penalty, in case your circumstances get better?

Ours allows you to repay up to 10% a year without penalty.

JoJoSM2 · 08/08/2019 16:58

Like a po said - it’s about your attitude to risk.

I don’t know how much your massive mortgage is but say 500k. Taking out a 2 year fix at 1.3% vs 15y fix at 2.55, you’d save about 12k in the first 2 years alone... That’s a lot of money but it’s a bit of a gamble - no point saving the 12k if the rates rise to, say, 5%. So it’s a bit of a gamble - brings us back to the attitude towards risk.

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