Should you fix your home mortgage for a number of years? The real risk if you do.
15 May 2014
The general advice in the finance sector is now is a great time to fix your mortgage. It’s almost like a type of speculation, trying to pick the right moment when to lock your financial situation up for a number of years.
Unfortunately while most people are focusing intensely on getting the best interest rate possible, they don’t even consider that biggest risk isn't rates not rising or even falling. No, the real danger is the mortgage holder’s situation changing and the need to break their mortgage, incurring break fees. These break fees can be horribly expensive, sometimes amounting to tens of thousands of dollars.
It’s seem a little bit frightening that someone would fix a mortgage for three, four or even five years without carefully considering their personal situation. There are so many uncertainties in life. What if they find they don’t like their new house, neighbours or street? What if they have an unexpected job transfer to another city or country or a redundancy? What about a relationship breakup? There is one thing certain about life and that is uncertainty. Yet very few people contemplate the real risks they are taking when they fix a mortgage for a long period of time.
Unfortunately while most people are focusing intensely on getting the best interest rate possible, they don’t even consider that biggest risk isn't rates not rising or even falling. No, the real danger is the mortgage holder’s situation changing and the need to break their mortgage, incurring break fees. These break fees can be horribly expensive, sometimes amounting to tens of thousands of dollars.
It’s seem a little bit frightening that someone would fix a mortgage for three, four or even five years without carefully considering their personal situation. There are so many uncertainties in life. What if they find they don’t like their new house, neighbours or street? What if they have an unexpected job transfer to another city or country or a redundancy? What about a relationship breakup? There is one thing certain about life and that is uncertainty. Yet very few people contemplate the real risks they are taking when they fix a mortgage for a long period of time.