10-year fixed-rate mortgage with free get-out after 5 years

For borrowers who are happy to stay where they are, a long-term fixed rate mortgage gives certainty, and can look increasingly attractive as rates go up over time. Plus it saves the effort (and the cost) of chopping and changing.

The Scenario

Six months earlier we arranged a bridging loan for these clients to buy a very attractive Grade II-listed farmhouse outside Wolverhampton, complete with barns and masses of potential. But dilapidated (and unmortgageable).

Now the essential refurbishments were nearing completion and the house was in a mortgageable condition they came back to us to arrange their exit with a lower-cost, long-term mortgage.

The Solution

This is a property they’ve invested a lot of time and effort in – it’s going to be their family home, so they were happy to commit to a long-term fix and save the re-valuation and product fees of arranging another mortgage in two or five years’ time.  

We found them a 10-year fixed rate at 2.35%, which compares very favourably with a current 5-year fix of 1.99%.

And what was even more attractive about this product was that the Early Repayment Charge (ERC) only applies for the first five years. (Most lenders aren’t prepared to be that generous when committing to a long-term rate.)

After that time, if rates are looking better elsewhere our clients can cancel without penalty charges. Or, if rates have risen, they can stick with this low rate for the full 10 years.