Deals can change rapidly but David Hollingworth, associate director for communications at London & Country Mortgages, says advisers will monitor market changes to keep on top of the market.
He says it is also important to look out for new features with long-term fixed rate mortgages and not just focus on the headline rate.
At the time this guide was produced, Mr Hollingworth pointed out a couple of lenders offer long term fixed rates that only lock the borrower in during the first five years of the 10-year period, which gives more flexibility.
Fees are always a crucial factor in getting the best overall package and Mr Hollingworth notes some deals will carry arrangement fees whereas others can have no fee at all.
Having said, he says that any fee will be factored in over a longer period so can have a smaller impact than it would on a short term product’s value.
Many customers like to add fees to the loan and thus Dale Jannels, managing director of Atom, points out advisers should remember their clients will pay interest on the fee as well as the loan taken out. He says this should be discussed and advised to the customer at the outset.
Mr Jannels says: “Early redemption penalties should also be reviewed along with the possiblity of porting the mortgage to another property.”
Martin Reynolds, chief executive of Simplybiz Mortgages, argues the importance of fees does not really change whether it is a two-year fixed rate, a 10-year fixed or a tracker linked product.
An adviser will consider all aspects of the product make up, rate, fees, length of the product and early redemption charges are just some when they are advising a client.
He says all of this will be balanced against a client’s needs and demands both in the short and long term.
Mr Reynolds adds there are no additional regulatory requirements for recommending long term fixed rate mortgages.
As with all mortgages he says a full fact find should be completed and the product recommendation should be based on the needs and circumstances of the client.
He says: “Additional risk factors with long term mortgages like early repayment charges throughout the fixed term chosen and the potential that interest rates could fall during the fixed term chosen should be discussed, documented and understood by the client.”
