Short-term mortgages no quick fix solution

Borrowers should avoid at all cost the glitzy looking 2 year fixed term mortgages, according to one mortgage advisor.

The reason being that, while blinding the senses with their good looking rates, they offer only limited protection against interest rate increases.

Ray Boulger of mortgage brokers John Charcol told the Guardian: ‘So far this year we have sold twice as many five-year fixed rates as two-year ones, although lenders generally have been putting most of their fixed rate promotional activity on the two-year market – presumably because the headline rates are more eye-catching.’

He added: ‘The rationale for taking a longer-term view is that for clients who want the security of a fixed rate, two-year fixes only offer security during the period when it is least needed, and if rates rise during that period it is only likely to be possible to re-fix at a higher rate after two years.’

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