How long should I tie into my mortgage for?

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This is very interesting question and the answer very much comes down to you. Although the bulk of this post is about how long to tie in for, it is a more generic term than how long should I fix my mortgage for as not everyone will opt for a fixed rate mortgage.

It is easy to just look at the rates and fees and think I will go with the cheapest or I will go with the one that means I do not have to go through the hassle of arranging a mortgage for a while. But I think it is important we look beyond that.

We have to look at a number of things when considering how long to tie in for. The things that we need to consider include:

  • What type of mortgage is this?
  • What are your future plans?
  • How old are you?
  • What are the deals on offer?

We will go through each of those questions. Hopefully by the end of it you may be able to answer your own question. If not we are on hand to help.

What type of mortgage are we looking at?

By that, I am thinking about what type of mortgage is this for you.

  • Are you a first time buyer and just looking to get on to the property ladder? Or will this be your long term family home?
  • Will this be a purchase for just you? Or are you maybe looking at moving in with your partner for the first time or is it a family home?

If this is your first step onto the ladder or you are moving in with someone for the first time, as difficult as this subject may be it is probably wise to consider a shorter tie in together. Relationships unfortunately do end and to be tied in for a 5 year deal is probably not ideal with someone you are still learning about and learning to live with… I will end there as I am not a relationship advisor, but just something to consider.

If on the other hand you have been with a partner for a while and you are looking at starting a family and moving into a bigger family home, then it might make more sense to tie in to a longer deal.

What are your future plans?

This sort of carries on from the section above. Are there plans to move up in your career, start a family, separate, move to a new area etc?

Do you want to be near family, near better career opportunities, better schools or better nightlife. I am 35 now and 3 years ago we had a child. We moved from our first home to a family home. The priority changed from pubs, bars, late night buses and take aways to schools and parks… and maybe a decent pub.

I suppose like the above, the big question is are you looking to just get your foot on the ladder and use it as a stepping stone? Or are you at the stage where you want something more long term? These will help to determine what type of deal we should be looking at.

How old are you?

I think a lot of these sections all interlink. Like the section above, your age will likely also play a factor in the type of mortgage you go for. Affordability may be the issue and so that could be limiting what you can afford.

On the flip side, once you hit that late 20s – mid 40s age bracket, you could find affordability is tighter because of kids and credit cards or loans rather than a lack of income. Again that may be limiting what you can afford and so a shorter term tie in to see you through until your finances are better.

You may be at an age where everything is now settled, this mortgage will allow you to buy your family home or your home to see you through until the end of your mortgage, in which case you may think paying slightly more but not having to worry about the mortgage for maybe 5 years is the better option.

Which leads nicely onto…

What deals are on offer?

Typically when you tie in to a mortgage deal, your options are a 2 year, 3 year, 5 year or 10 year tie in.

At the minute, there is not a huge difference between 2, 3 and 5 year deals. 5 years are slightly more expensive but not a lot and by the time you factor everything in, there is a good chance it would actually be cheaper as well as less hassle.

However you probably do not want to be tied in for 5 years if you are thinking of moving in the next few years regardless of the deal. Otherwise if they will not lend to you in the future or do not like the property you want to buy, then you could find you are stuck unless you are prepared to pay the Early Repayment Charges to get out of the deal.

Historically 5 year deals have been noticeably more expensive than 2 or 3 year fixed rates so the above comments could change in the future.

10 year deals do stick out as being quite a lot more expensive at the minute. I think this is because there are not many of those deals available. A lack of competition is probably allowing the lenders in that market to keep rates a little higher than they would be if there was more competition.

Summary

I suppose the summary is just to say look beyond the rates and fees. Think about what your future plans are and where you are in your life.

Part of our job as brokers is to help you think about how long tie in you should be looking at and to help you make that decision. There is no right or wrong answer or a one size fits all approach, if this is something you are struggling with lets have a chat and see if we can help.