Mortgage Initial Period – What length?

When you commence a mortgage it most cases you have a 'deal' for an initial period. This is typically 2, 3 or 5 years although sometimes there are 1 or 10 year + initial periods.

The only exceptions to this would usually be a lifetime Bank of England base rate tracker mortgage or a standard variable rate mortgage where the deal lasts the full duration of the term for example 25 years.

But why choose an initial period of 2 years compared to say 5 years?

There are several factors to consider. When you commence an initial period in most cases you are 'tied in' to the deal, meaning if there will be a financial penalty if you come out of it during that period. That is fine as long as you are not planning to make significant changes during that period. Most mortgages now are portable meaning you can move the 'deal' across to the new property as long as you meet their lending and affordability criteria.

Other factors to consider include: are you concerned about rising interest rates over several years and want the certainty? Do you thing rates may fall and wish to review your deal sooner? Do you think the property market might crash and do not wish to be in negative equity, thus being unable to secure a new deal when your deal ends therefore wish to have a longer initial period?

Having a discussion with a great mortgage adviser is essential.

Your home may be repossessed if you do not keep up repayments on your mortgage.