Fixed Rate Mortgage Advice

Fixed Rate Mortgage Advice
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.
Fixed Rate Mortgage Advice Fixed Rate Mortgage Advice Reviewed by Henda Yesti on June 30, 2018 Rating: 5

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