Saving on a five-year vs ten year-deal is £43 per month!

An article in the Daily Mail reported that borrowers can fix mortgage payments for ten years at a rate of just 3.04% with a 40% deposit if they act now with TSB.  Monthly payments on a typical £150,000  25 year-mortgage would be £714.44 with the total cost including fees of £995 over the ten year period being £39,895.  Nationwide announced yesterday that the rates on the best ten-year mortgage were going up by 0.1%.

David Hollingworth,  Director at London and County mortgage brokers says “With almost a 1% point difference between the best ten year and the best five year mortgage rate, homeowners are always going to go for the shorter, cheaper deal to bring down their monthly repayments.  Currently it is estimated that only 2% of mortgages being taken out are for ten years.  Yet as interest rates continue to remain at historic lows, the number of ten year mortgage deals available has soared.

Today there are 108 lenders with an average rate of just 3.54%, but these deals won’t last forever.

The Bank of England is widely expected to raise the UK’s base rate of interest from 0.5% next year, although probably not until May or June.  If that happens, mortgage rates will follow quickly, which is particularly bad news for homeowners on their provider’s standard variable rate.  If the variable rate increases by just 1%, it will add another £105 to the typical monthly household mortgage repayment.  This is particularly bad news for any homeowner as lenders can change these with no notice.”

Visit one of the mortgage comparison sites to find out the best rates that suit you.