Title:
Fixed Rate
Mortgage Advice
Word Count:
498
Summary:
One of the most
important decisions you will make in your financial life is which mortgage you
should get. For many people, the option of a fixed rate mortgage seems
appealing
Keywords:
Mortgages,mortgage,uk,home
loan,loans,loan,uk,compare,adverse,credit,debt consolidation
Article Body:
One of the most
important decisions you will make in your financial life is which mortgage you
should get. For many people, the option of a fixed rate mortgage seems
appealing. But what exactly is a fixed rate mortgage, and why do so many people
choose this option? If you are new to mortgages then this article will let you
know a little more about fixed rate mortgages and their benefits.
What does fixed rate mean?
A fixed rate mortgage is fairly straightforward, and does exactly as the name
suggests. A fixed rate mortgage has an interest rate that remains the same
throughout the mortgage term, meaning that your monthly repayments will remain
the same, allowing for inflation of course.
Why a fixed rate mortgage?
Many people choose fixed rate mortgages because of the security and peace of
mind that they provide. If you have a fixed rate mortgage, then you know your
monthly repayments will not change, meaning you can budget effectively for both
the short and long term. If you have a mortgage with a variable rate of
interest then your payments can change depending on market fluctuations. This
can leave you paying less, but often leaves you paying more each month. The
best times to get fixed rate mortgages are when competition is high, and the
fixed interest rate is lower than that of the tracker or variable rate
mortgages.
Are there any drawbacks?
There are drawbacks to getting a fixed rate mortgage. The biggest drawback is
that the interest rate is usually higher than that of variable rate mortgages.
The added security comes at a price, in that you have to pay more in interest
over the length of the mortgage. Also, the ‘fixed’ rate is usually only fixed
for a certain number of years, usually 2 or 3, after which the rate can be put
up and then fixed for another period. This can mean that your mortgage will be
cheap now, but in the future the rate could rise.
Who should get fixed rate?
Despite its drawbacks, there are many people that should definitely opt for
fixed rate mortgages. If you are on a tight budget and have a fixed income each
month, then you cannot afford for your payments to rise. Having a fixed
repayment each month means that you know you can make the payment even if
national interest rates rise. Also, if you can get a deal whereby the starting
interest rate is lower than that of a variable rate mortgage or even the same,
then opt for the fixed rate mortgage.
How to decide?
If you are still unsure about whether or not a fixed rate mortgage is right for
you, then consult an independent financial advisor. They will be able to help
you find the best deal, as well as tell you whether or not the base interest
rate is going to fall or rise. This will determine whether a fixed or variable
rate mortgage is best for you.