BUY TO LET Richard Walker National Sales Manager Virgin Money
TIME TO CONSIDER LONG-TERM FIXED RATES? Richard Walker, Virgin Money’s national sales manager, talks about the benefits of locking in for the long term. The Government wants to move towards a market where more borrowers are on long-term fixed rates, but it hasn’t managed to shift consumer preferences quite yet. However, we’ve seen the launch of a handful of super-long fixed rates (some up to 40 years). And there’s already a decent choice of mortgages fixed for longer than five years. In fact, Virgin Money already has a range of longer-term mortgages of 7, 10- and 15-year fixed rates. Richard Walker, national sales manager at Virgin Money, said: “We’ve seen five-year fixes grow in popularity over the last decade, but longer-term deals still account for a small proportion of our lending. However, some borrowers really appreciate the chance to lock in for longer, especially in the current climate.”
Who do they suit? “Our clients are a mix of remortgagors, home movers and first-time buyers. What they all have in common is their attitude to risk and their preference to secure their monthly repayments beyond the medium term. “Most feel confident they’ll be in their home and the same financial circumstances for the long term. Some are older borrowers with just 10 years left on their term, but we also see first-time buyers who are worried about the impact of rising rates.” In fact, Virgin Money provides its 10- and 15-year fixed rate mortgages up to 95% loan to value (LTV), proving these are not simply products for equity-rich older homeowners to cover the remainder of their mortgage term. However, Walker admits: “Many clients simply want the lowest monthly payments, so a longer-term fix is never going to appeal when they are shown the costs against a two-year fix.” Here’s why long-term fixed rates could be a smart option for some borrowers: •
Competitive rates: Mortgage rates are still at historically low levels, and the premium on longer-term fixed rates is especially small.
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Save on fees: If your client takes a 10-year fix, they could potentially save four lots of product fees compared with taking two-year deals over the same period.
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Long-term rate security: Whether they’re risk averse, or their finances don’t have much wiggle room, many borrowers crave the security a long-term fix gives them.
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Flexible products: There are caveats to fixing for a long time, including potential penalties if your client needs to redeem their mortgage early. But many long-term fixed rates are now fully portable, so your client can take their deal across to a new property if they move home during the fixed period.
MARCH 2022
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Borrowing boost: Some lenders, including Virgin Money, can offer more generous lending terms, including larger mortgages, to those who are locking into their rate for a longer period – five years or more – because of the certainty of repayments over that period.
Broker benefits Long-term payment security will be the right option for some clients. If you help them to secure a competitive 10-year-plus fixed rate, it doesn’t mean you won’t see them for a decade. Their circumstances could change at any point, so stay in touch over the fixed period and they’re more likely to come back to you when they need a new deal. Building long-term client relationships is a key part of your overall retention strategy. For more information on Virgin Money’s long-term fixed rate mortgages, visit our website: https://intermediaries.virginmoney. com/virgin/. You can also get in touch with your Business Development Manager (https://intermediaries.virginmoney.com/ find-your-bdm/), or Regional Service Team (https://intermediaries. virginmoney.com/virgin/contact/support/).
