Two-year fixed-rate mortgage deals 'not suitable for many'

Date:Thursday 29th January 2009
Author: Max Freedman

Mortgage deals lasting two years and with fixed rates are unlikely to benefit many people, a mortgage adviser has said.

Ray Boulger, of mortgage advice firm John Charcol, acknowledged that individual circumstances vary and the best options will be different from case to case.

But he pointed out that mortgage rates are likely to be rising in two years and also that it cannot be known how many deals will be available then for people needing loans-to-value of 90 per cent.

One option he suggested for people switching from a tracker mortgage was to look for a tracker with a "droplock option with no collar".

This will postpone the point at which their rates become fixed and may help protect against the impact of the increased rate that a fixed deal will bring.

Generally, Mr Boulger believes that fixed-rate mortgages lasting five years or longer will be best for most people.

The Council of Mortgage Lenders recently urged people who can afford to make overpayments on their mortgages to do so.

It said this was a way to protect equity in one's property in the short term.