The Benefits Of A Fixed Rate Remortgage

The Benefits Of A Fixed Rate Remortgage



The Benefits of​ a​ Fixed Rate Remortgage
There are many types of​ mortgages .​
One type that potential home owners will hear a​ lot about is​ a​ fixed rate mortgage .​
When looking for​ a​ mortgage it​ helps to​ understand​ the differences in​ each mortgage and​ what certain​ terms, like fixed rate, mean .​
this​ can help a​ home buyer choose the mortgage best suited for​ them .​
It can help them to​ make an​ informed decision​ .​
As the home buyer will find out fixed rate mortgages have some benefits over other mortgages.
First of​ all, there fixed rate refers to​ the interest rate .​
in​ the mortgage world there are two types of​ interest rates .​
There are fixed rate and​ flexible rates .​
Fixed rates stay the same for​ the life of​ the loan .​
The home buyer locks into the current interest rate that id offered when they sign the loan agreement .​
a​ flexible rate mortgage has a​ mortgage rate that changes.
With a​ fixed rate mortgage the home buyer has the benefit of​ having a​ mortgage payment that will be the same every month for​ the life of​ the loan .​
They will also know exactly the amount they are going to​ pay.
With a​ flexible rate mortgage the home buyer will have different payments each month as​ the interest rate goes up and​ down .​
They will not know the total amount of​ their loan overall nor will they know ho w much they owe each month beforehand.
Now the term fixed rate can apply to​ different types of​ loans .​
a​ first time home buyer loan, for​ example, can be a​ fixed rate loan .​
Any loan except a​ flexible rate loan can be a​ fixed rate loan .​
this​ is​ important for​ a​ home buyer to​ understand​ so they do not get confused or​ otherwise tricked by a​ lender.
Additionally, a​ fixed rate loan can be a​ bad choice if​ the market is​ currently in​ a​ trend where interest rates are dropping .​
if​ a​ home buyer is​ buying a​ home during a​ market like this​ their better choice would be to​ get a​ flexible rate loan and​ then lock in​ once interest rate bottom out.
A flexible rate loan can often be changed to​ a​ fixed rate, but it​ is​ very hard to​ switch a​ fixed rate to​ a​ flexible rate .​
The reason​ for​ this​ is​ that with a​ fixed rate the bank knows what they are earning and​ they like it​ when the interest rate of​ the fixed loan is​ higher then the current rate because they are making more money off it .​
To change a​ fixed rate loan to​ get a​ different interest rate would require a​ refinancing of​ the mortgage.
A fixed rate remortgage can be a​ good idea, but it​ can also be a​ bad choice .​
It is​ up the home buyer to​ know what to​ watch out for​ and​ to​ make sure they are making the best decision​ possible .​
The home buyer is​ going to​ be the one paying for​ their decision​ in​ the end .​
The lender may be willing to​ explain​ the options, but they are not likely to​ push a​ buyer into choosing the cheaper option​ .​
They simply sit back and​ let the home buyer decide.




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