Save money with a longer term fixed rate deal

Some industry experts have stated that homeowners looking to take out a fixed rate mortgage deal could actually benefit financially from opting for a five year fixed rate term rather than the more popular two year terms, as this could save them around £5000 over a ten year period if they decide to keep remortgaging to another fixed rate deal.

Officials state that the fee associated with remortgaging from one two year fixed rate to another is around £1500, so over a ten year period the cost could be as high as £7500.

However, with a five year fixed rate deal the fee is often around £1000 or under, and this means that over the same period you would only pay £2000 or less, saving you around £5000.

Recently the Chancellor of the Exchequer, Alistair Darling, has stated that he wants lenders and consumers to look at longer term fixed rate deals for 20 or 25 years, but many are concerned that these terms are too long, and could prove expensive to the consumer in the event that their circumstances change and they need to pull out of the deal.

It is also important for consumers to remember that the interest rates on a five year fixed rate mortgage can vary from one lender to another, as can the fee associated with remortgaging at the end of the fixed rate term, so it is important for borrowers to compare these figures before signing up to a deal with a particular lender.