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5-year fixed rate mortgage products are appealing as they offer long term security for your mortgage payments. Interest rates are currently sat at historic lows, but as we have previously reported, they are predicted to rise within the next year. Accordingly, now is the ideal time to lock in a low rate.
Long term fixed rate mortgage products can be particularly attractive for those who are paid in unconventional ways. Self-employed workers may face unpredictability in their salary, so having set mortgage payments can be helpful when budgeting.
Unfortunately, this security comes at a price. Long term fixed rate mortgage products will generally come with hefty early redemption charges (ERCs) attached. In some cases, an ERC can be up to 5% of the loan, making it financially challenging to pay back your loan early, or remortgage onto another rate.
Penalty-free fixed rate mortgages are fairly unusual, but our product of the week offers the best of both worlds. A lender with whom we have an excellent relationship is currently offering a 5-year fixed rate of 2.35%, with a £499 product fee.
This product is available for up to 85% loan to value (LTV), which again, is ideal for self-employed clients who wish to maintain their liquidity in order to meet cash flow issues within their business. This therefore enables you to budget comfortably, whilst retaining the flexibility to reassess your position without facing penalties.
This lender is an excellent fit for self-employed clients, especially if you are seeing year-on-year growth. They are willing to take your latest years’ figures when calculating the affordability of the loan, providing you can show two years of accounts.
Of course, self-employed clients are by no means the only group who could benefit from this deal. 2.35% is an excellent rate for a 5-year fixed product regardless of your circumstance, so if you’re looking for a long term fixed rate mortgage but still seeking an element of flexibility, please do get in touch for a further discussion of your circumstances.