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Lock into your mortgage rate whilst you can

With rumours still circulating about the possibility of a rise in the Bank of England base rate and as many lenders have slashed their rates to below 3% perhaps now is the time when you should consider locking your mortgage interest rate into a five year fixed. The fixed rate has been on the move in the wrong direction for a while now and in July this year it rose above 3% for the first time in a long time.

Markets firmly believe that the interest base rate will not increase this year which is why the fixed rate has been lowered, but for how long? Many banks are now offering deals below the 3% mark, most of the major banks as well as Virgin Money, which was formerly Northern Rock of course, but will all of these you have to consider the fee that is attached for doing the fix.

Much will depend of course, on the amount borrowed, and it is here that you maths have to come into play. These fees can be quite high, form £999 in the case of HSBC, to £1,999 at Woolwich which is the Barclays mortgage provider.

If you are looking for a big loan then Virgin will offer 2.99% on a five year fix for a loan between £200,000 and £1,000,000, but you will need a 40% deposit, the fee is £1,594 rather insignificant if you are buying property in the region of £1.4 million! Of course at the end of the five year fixed term rates will jump to a new and in all probability, higher rate.

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