Is it a good idea to lock into the Post Office’s new seven-year fix rate mortgage?
More of the lenders are starting to offer longer-term fixed rates and there is an excellent choice of five, seven and ten-year mortgages. There is even a 15-year fixed rate.
The Post Office has just launched a seven-year fix priced at 2.32% (The overall cost for comparison is 3.6% APRC), and it has a £495 arrangement fee.
The mortgage is around 0.6% more expensive than the cheapest five-year fixed rate and marginally higher than the lowest ten-year fix. Barclays also has a more competitively priced seven-year deal that is 0.33% cheaper.
Aaron Strutt, product director at Trinity Financial, says: “If you are looking for the cheapest mortgage then the two-year fixes and trackers have the lowest headline rates. However, if you would prefer to lock into one of the longer-term deals, there are a lot of options but you need to make sure you choose the right deal.
“Many of the fixed rates have high early repayment charges, although most of the mortgages are portable.”
The Post Office’s 2.32% rate is competitively priced but not market-leading. It has 4% early repayment charges until 30 September 2023 reducing to 2% until 30 September 2026. Barclays seven-year fixed-rate has 5% early repayment charges for the full fixed-rate period.
Ensure you are getting the best deal
When locking into a longer-term fix it is important to check that you are getting the cheapest possible deal, especially with the lenders offering such a range of rates now. It is easy to pay more than you need to if you don't do your research.
While the pay rate is important, it is also worth checking the lender's reputation before you commit for the long-term. If you are going to make a mortgage commitment, you need to know the lender has a good track record for customer service. Check things like the permission to let policy in case you need to let the property.
Should you take a seven-year fix
If you are planning to stay in your property for the foreseeable future and you have a larger deposit, the payment security will be appealing to some borrowers. It is worth noting that the vast majority of mortgages are taken on two-year rates and five-year fixes are very popular.
Call Trinity Financial on 020 7016 0790 to secure a mortgage
Get started today
Speak to one of our mortgage experts. Book an appointment to come and see us or request one of our experts to call you.
