For those who are averse to risk when it comes to making your mortgage payments, taking out a fixed rate mortgage may be right for you.
Find out more about how these mortgages work.
For peace of mind, fixing your mortgage payments, for an agreed period of time, means that you will not pay over a certain amount a month for your mortgage.
Every mortgage is split into two parts, capital (which is the bulk of the funds borrowed to purchase a property) and interest. The interest you pay when taking out a fixed rate mortgage stays the same, regardless of fluctuations in the Bank of England Base Rate and your own lender’s standard variable interest rate.
When taking out a fixed rate mortgage, it is important to choose the time period carefully, to ensure that your mortgage payments remain manageable for the duration.
When applying for a fixed rate mortgage, you are making an agreement with the lender that you will pay a set amount every month towards the capital and interest of your mortgage loan, for the entirety of the fixed payment period.
At the end of the fixed period, your rate of interest will likely automatically switch to your lender’s standard variable rate for the remainder of the mortgage term (which could be up to 23 years or longer).
Paying a fixed rate for a certain period acts as an incentive to would-be borrowers. At the end of your fixed period, you could decide to switch lenders and remortgage. Exiting the deal early, on the other hand, may incur an early repayment charge.
To find out more about the cost of taking out a mortgage, take a look at our Guide to Applying for your First Mortgage.
An independent mortgage broker can help you figure out how long you should fix for (whether it’s 2 years, 5 or 10 years). But consider the following in your decision;
Beverly is looking to buy her first home. She wants the security of a fixed rate mortgage and is now deciding if she wants to fix for two or five years. She has seen a five-year fixed rate mortgage deal, charged at 4.15% interest. She has also spotted a 2-year fixed rate deal for 3.5% interest. Beverly would like to keep her payments as low as possible, however, she is aware that the security of a 3.5% fixed interest rate will be short-lived. She goes for the five-year fixed rate deal, at a higher rate of interest. This will give her security for a longer, whilst still being very competitively priced.
If you are asking yourself, ‘should I fix my mortgage?’ Experts are on-hand to offer you a free, no-obligation quotes and advice. Get in touch with an independent mortgage broker now.
My biggest concern was finding a mortgage with no strings attached. My options were clearly explained to me and I felt confident about the decision. Alice Silverman, Stoke-on-Trent
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATION EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
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