For years the most widely used and popular fixed rate mortgage deal out there was the 2-year fix. However, recently the 5-year fixed rate mortgage is rapidly gaining popularity amongst home owners/purchasers, and it looks set to take the 2-year’s crown very soon.
Consumers are now more willing to lock into a longer term than they previously would have for a number of reasons: 5- year fixed rate mortgages are now available at rates just 0.4% higher than their comparable 2-year products; this paired with growing uncertainty over future increase in the Bank of England base interest rate means many consumers are choosing certainty and stability over a longer period of time, rather than opting for the 2-year option which is slightly cheaper in the short term but could be unpredictable as the loan matures.
Whilst a 5-year fixed rate deal can be the most suitable option for you, it is always important to carefully consider what caters better to your unique circumstances as seafarers, especially when making such a big commitment. A seafarer leads a very different life to the average consumer of UK mortgages. Your high income, coupled with low outgoings, can give you the ability to save far more than the average person.A sensible thing to do with this excess income could be to pay off your mortgage as quickly as possible, whilst you are still in the industry, and before you make your exit plan. Whilst there are of course other investment options available to you, the longer the debt stands the more it will end up costing you.
A 5-year fix can come with hefty penalties if you want to pay off the mortgage early, or indeed if you wish to make lump sum payments over 10% of the loan amount each year. You are of course entitled to pay these lump sums in to a separate bank account and have the mortgage payments taken from there. 5 years is a long time, and much can change within this period.Whilst you will need to be certain that you want to keep that mortgage for the full term, or willing to dig deep to pay the early repayment charge, the certainty and ability to plan ahead offered by this kind of product could be well suited to a seafarers’ lifestyle.
Contact an experienced member of the Mortgages For Yacht Crew team today, to arrange a free consultation!
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*Your House may be repossessed if you do not keep up with your mortgage repayments*