Who should choose a lifetime rate mortgage?

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Who should choose a lifetime rate mortgage?

Lifetime rate mortgages are designed to last for your entire mortgage term which, nowadays, can be anything up to 40 years.

Incidentally, these are not the same as lifetime mortgages, which are a variety of equity release plan for retired people.

You can get traditional, flexible and offset lifetime deals.

(For more on these, read Flexible mortgages and The offset mortgage.)

These can charge fixed, variable tracker or standard variable rates of interest.

(See The types oflifetime rate mortgage.)

The advantages

• Find a competitive one and there should be no need to remortgage ever again.

• Many lifetime trackers don't have early redemption penalties.

The disadvantages

• The interest rates on lifetime trackers tend to be slightly higher than on the best short-term (says two or five-year) offers.

• Lifetime fixes and standard variable rates are never competitive.

Should I choose a lifetime rate?

If you want to avoid the hassle and expense of remortgaging which can run to several thousand pounds every few years a market-leading lifetime tracker could save you more than it costs in extra interest.

(For a full explanation of the expenses involved, visit Costs of remortgaging.)

It could also be worth choosing a penalty-free lifetime tracker if you might want to clear all or part of your debt in the next few years.

The lifetime fix is designed to give ultra-cautious borrowers who want to know exactly what they'll be paying for the next 25 years a sense of security.

But this comes at a price in the form of uncompetitive rates (compared to trackers, variable rate discounts and shorter fixes) and early redemption charges meaning the lifetime fix should be shunned by everyone else.

Spending the lifetime of your mortgage paying a standard variable rate is not recommended either unless you like throwing money away.

(For more on this, see Why you should never pay a standard variable rate.)

Not convinced about lifetime rates?

You may feel, on reflection, that a shorter deal would suit you better.

To help you decide how long to go for, read What length of Mortgage deal should I choose?

To read more on this subject please see the list below or your mortgage guide or your home buying guide

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