Is it worth my while fixing my mortgage term for 10 years?

QI WANT to do some personal financial administration. I thought I’d start with reassessing my mortgage situation because it is our single biggest monthly bill. I’m 16 months into a three-year fixed rate of 4.2pc. But should I even bother looking at this? Do I just have to wait until my rate term is up? Everyone’s talking about great long fixed rates, of up to 10 years even. Would it not be madness to lock into something for so long? A

YOU are not necessarily married to a bank just because you are in a fixed rate. Call your bank and ask about the breakage fee, if any, that applies if you were to redeem or switch your mortgage.

Generally, banks are offering lower fixed interest rates than variable rates because they are trying to incentivise borrowers to tie in with them for a number of years. There is a risk in entering into a longterm fixed rate, as interest rates may fall. However, there is arguably more risk with a shorter-term fixed rate, as nobody knows what interest rates will be available when you are exiting this rate.

It depends your own situation. You need to consider whether you think you might be in a position to increase your monthly payments or pay an additional lump sum on your mortgage over the next 10 years as there may or may not be a penalty for this.

A fixed rate will give you the peace of mind of knowing exactly what you will pay over a specific period of time and you can budget accordingly. For some people this certainty is a valuable benefit. You should take expert advice on this – perhaps a shorter fixed-rate term wouldbebetterforyou?Asyousay,a mortgage is your biggest monthly expenditure, so any decision you make around it should be given very careful consideration.

Periodically reviewing your mortgage, your mortgage protection and all your other financial products will save you money in the long run, so schedule an annual financial health check to see where savings can be made.

Q

I RECENTLY renovated my property and I was advised by my builder to replace my existing tiled roof with metal cladding. It has a lifetime guarantee. Do I need to tell my insurers I have made this change? A Yes, you would need to advise your insurers of the change to your property even if the roof comes with a lifetime guarantee. Any non-standard construction, like felt on timber, metal cladding, or corrugated iron, would need to be disclosed, according to Deirdre McCarthy of InsureMyHouse. ie. All insurers would have different criteria in relation to the percentage of non-standard construction they would be willing to quote on. In this case there would be a number of insurers who would quote on 100pc metal cladding roof, so don’t worry if you are currently with a company that says this type of risk would not be acceptable. There are many insurers on the market who specialise in non-standard houses.

It is important to remember to always disclose the information to your insurers as the last thing you want is a claim to be declined because you forgot to tell the insurers that you had made changes to your property.

Q

MY mother (72) was widowed last year, and in recent months has decided to get back on the road after a lull of 20 years. She has done her theory test, recently got her learner’s permit, and has her driving test booked for three months’ time. She is looking at insurance for the 2010 Ford Focus that my dad used to drive, but has been in disbelief at some of the quotes she’s been given, even with the insurers they were with for years. What’s the best way to reduce her premium?

A

THE most important thing to do on her behalf is to shop around for quotes. Most older consumers are less likely to shop around. This is mostly down to fear of change and/or a sense of loyalty to their current provider. Sticking with the same insurer will by no means guarantee you the best deal, according to managing director of InsureMyCars. ie Jonathan Hehir. It can be often be a case of quite the opposite. His advice is to use a broker. Another idea is to consider a lower annual mileage policy, depending on her circumstances. Agreeing to restrict the distance a person drives can help to lower costs, as insurers equate lower mileage to less risk. Adding a named driver to the policy is also a good tactic for reducing premiums, and one that is often overlooked by motorists. It’s important to ensure that the person added to the policy has a clean licence, or cleaner, than the driver, but doing so can amount to a discount of up to 20pc with some insurers.