Fixing your home loan for a longer terms gives you a sense of security. There are things you have to think about before making such a long term commitment.
- Selling your home in the next few years? Break fees could be incurred if you are still locked in at a higher rate than the prevailing one.
- If you will only have a mortgage for the next ten years, the wrong long call could not leave much time to even out the bets after your rate expires
- Cash backs – banks are offering cash back incentives when you switch, these currently have a 3 year pay back period currently.
If you really can not decide, consider splitting your mortgage into two different terms. Some long and some short.
The five year rate gives you the ability to know for sure what the payments will be. If this means that you hold the property for longer, the profit from the rate might be a small variable. More time in property mostly means more money.
