What Are Fixed Rate Mortgages?
Hot Topics
- Can I Get a Mortgage With A Group Of Friends?
- You are allowed to get a mortgage with up to three friends in the same way that you are allowed to get a mortgage with a partner – an idea that is appealing to more young professionals at the moment.
- Is There Any Way I Can Lower My Monthly Repayments Without Switching Mortgages?
- If you find that you cannot afford your monthly mortgage repayments and do not wish to switch your mortgage to another lender – then you will need to negotiate new terms with your existing lender.
- What If I Die Before My Mortgage Is Paid Off?
- If you die before your mortgage has been repaid, your estate will face the cost of paying back the outstanding balance. The mortgage will not be written off by the lender, it will have to be paid by the next of kin.
- What Is A Remortgage?
- ‘Remortgage’ is basically the term for switching your mortgage to another mortgage lender.
- What Are ISA Mortgages?
- If you take out an intrest only mortgage your lender will expect you to put in place a ‘financial vehicle’ capable of repaying your mortgage at the end of the mortgage term.
Fixed rate mortgages set the interest rate on the loan at a level agreed at the outset of the loan. Fixed rate mortgages only have a fixed rate for a set period of years after this time period the interest rate will revert to your lenders standard variable rate.
Fixed rate mortgages can be very advantageous if you are trying to manage your expenditure. You will be fully aware of how much you have to pay each month, and you will be insulated from any rises in the base rate and cannot be caught out with sudden increases in payments. If the interest rate rises above the fixed rate on your mortgage, you will actually be saving money.
However, if the interest rate falls during your fixed rate period, the real cost of your mortgage will actually increase. However, you will still know how much money will be coming out of your account each month, this allows you to more effectively plan your personal finances.
The fixed rate period is typically between six months and five years, traditionally fixed rate periods of between 1 and 3 years have performed best. You may even be able to get a fixed rate for the hole life of the mortgage. NOTE this can be very dangerous, always ensure that interest rates are likely to rise before taking out an fixed rate mortgage.
When considering what period of fixed interest rate would be best for you refer to a qualified mortgage broker. You should also take advantage of the internet and the print media to read up about the Bank of England interest rates so that you can follow your brokers reasoning regarding what is the best fixed rate mortgage for you.
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