The 25 year fix

It is common for people to compare mortgage deals over 25 year terms. The actual length of your mortgage can be more or less than this, but it seems to be the starting point. Halifax has just brought out a mortgage deal that is fixed at 6.39% for 25 years. There are restrictions as to who can borrow on this deal, and there are other lenders who offer long term fixed deals. But just imagine taking out a fixed rate deal and never having to remortgage again! It sounds excellent.
With five interest rate rises in the last year, you might be concerned about the impact of future increases. The Monetary Policy Committee decided not to raise the base rate this month, but historically rates are still low.
According to the Bank of England’s website; in the 80s the base rate was never below 8%, and in the 90s never below 6% but was often much higher.
There is always the possibility that rates will go up as well as down, so why doesn’t everyone take out a long-term fix? The Halifax deal is portable, which means you have the option of moving house and keeping the same deal, subject to certain criteria being met. Long terms deals like this have some attractive features that will appeal to many borrowers in the market. However, long term fixed rate deals have been around for some time and are not the most popular of those available.
For instance, there can be long tie in periods. In this case with Halifax, you will face an early repayment charge of 3%, if you pay back your mortgage within the first 10 years. That could be a significant penalty if you took out this deal and had to end it early. To take out a long-term deal like this you would have to seriously consider what the future holds for you in the long run. This could be extremely difficult. Consider the first time buyer at the start of so many journeys: a career, a relationship, a family - never mind property ownership!
If the security of a fixed rate mortgage appeals to you, you must consider how long you can commit yourself to one mortgage provider.
How likely is it that your employment status, your family and social circumstances will remain unchanged? Always remember, what represents a good mortgage deal for some people might not be a good deal for you. A good mortgage adviser will help you determine what the most suitable deal types are by asking you the right questions.