With uncertainty surrounding interest rates and the possibility of increases to come, it makes sense to choose a fixed-rate mortgage when taking out your first or a renewed mortgage.

That way you’ll have the peace of mind of knowing what your payments are going to be regardless of what the Bank of England does to interest rates.

But the big question is: how long do I fix my rate for?

Should you fix it for two years, three years, five or even 10?

Really, the choice is yours, but there are some things to consider before you make a final decision.

It might be tempting to think ‘well, interest rates are a bit unstable, I’ll fix it for 10 years and then forget about it’. It’s true that your payments won’t change in those 10 years, even if interest rates go through the roof.

But at the same time, 10 years is quite a long time and you’ll pay a slightly higher rate to begin with for the convenience of fixing for a decade. And then what happens if interest rates come down a few times during that period – you could find yourself paying a lot more for that peace of mind. And if you decide to move during that period, it may be that you can’t move the mortgage with you and have to get a new deal.

At the other end of the scale you can fix the rate for just two years, protecting yourself from any short-term volatility in interest rates but not setting your payments in stone for too long. The interest rate will be smaller too.

The slight disadvantage of a two-year fixed rate is that it ends after just two years and you have to go through the process and cost of getting a new mortgage deal.

So if a 10-year fixed rate seems too long and maybe a two-year deal too short, maybe the best for you is a three or better still, a five-year fixed rate mortgage.

Time was when the difference in interest rate between a two-year deal and a five-year one made the longer term seem expensive. But that isn’t really the case now. Moneyfacts reports that the difference is around 0.36%, with a typical two-year rate around 2.49% and five-year rate 2.85%.

Any slight difference in the overall rate will possibly be offset by not having the cost of remortgaging after two years.

There are many things to consider – not least your own set of circumstances and it is important to get the best advice on mortgages, especially as brokers can often access deals that aren’t available to the public.

For a free, no obligation discussion on any mortgage or insurance-related issue, please give me a call on 01723 384558 or 07767 692 653 or email me at mgrayshan@googlemail.com