Why do mortgages matter beyond fixed term?

[Oswaldowl]

Hi,

Sorry this is my second mortgage question today!
I am in the process of choosing / applying for one. It’s for my first house and I’m looking for a repayment one fixed for 5 years.

I’m ignoring the interest rates beyond the 5 years, because I assume I will sell/remortgage at that point? Isn’t that what most buyers like me do?

I’m comparing two mortgage deals in particular, one is with my own bank and another with a building society. The one with my own bank is more expensive to the tune of £500 over the 5 years (but considerably more over 30 years, obviously). I’m thinking £500 might be worth it for the convenience of the quick application and having a mortgage with my own bank.

Just wondering if I am missing something? Should I be ignoring the costs over 30 years, or am I making a mistake here?

It doesn’t matter at all - you will remortgage after five years

Well, if you remortgage in five years' time you'll have to go through underwriting again. You might have lost some of your income, be in negative equity, or bank lending regulations may have changed. You might have taken out a PCP on a new car, or run up credit car debt.

All of these could conspire to prevent you being accepted for a new loan, and therefore stuck with your current lender.

Ahh, I see. Thanks, that makes sense. I’m assuming my situation will the the same or better in 5 years time, but can totally see what you’re saying, the future is always uncertain. Plenty to think about! Thank you!

Also, interest rates are still very low. That could all change in 5 years.

We took out a 10 year fixed rate, though we're almost halfway through that. We have no intention of moving (house big enough for teens, flat enough to grow old in) but if we did, we should be able to take the mortgage with us, as long as the new house fits the criteria.