Fixed Rate Mortgages Know Your Rate

Fixed Rate Mortgages Know Your Rate



Fixed Rate Mortgages – Know Your Rate!
Nothing is​ ever certain in​ the​ world of​ finances,​ and there’s no way of​ predicting how the​ market will change in​ the​ future .​
However,​ if​ you​ want to​ be able to​ plan your budget precisely,​ then a​ fixed rate mortgage might be the​ right option .​
The repayments will be fixed for a​ set period of​ time – usually between the​ first one and five years of​ your mortgage,​ so you​ can be sure that any rises in​ the​ interest rate will not affect you​ .​
The term the​ rate remains fixed can be as​ long as​ ten years.
Fixed rate – the​ pros
For those on​ a​ tight budget,​ it​ can be useful to​ know exactly what will need to​ be set aside each month for mortgage repayments .​
Also,​ it​ can be a​ good move to​ fix your rate when the​ economy looks like it’s about to​ change and interest rates rise .​
If,​ from studying the​ market,​ you​ anticipate that rates are set to​ rise in​ the​ near future,​ then taking a​ fixed rate now could mean you​ will save money over the​ next few years .​
Even if​ the​ Base Rate set by the​ Bank of​ England rises,​ you​ will be protected,​ at​ least for the​ term that your payments are fixed.
Fixed rate – the​ cons
If the​ market changes and interest rates fall,​ you​ could lose out on​ a​ reduction in​ rates .​
Fixed rate mortgages are often set at​ slightly higher rates than the​ cheapest deals .​
Be aware of​ redemption penalties and clauses that tie you​ to​ your mortgage – these can last much longer than the​ fixed rate period and you​ may find it​ prohibitively expensive if​ you​ want to​ change lenders or​ pay off your mortgage.
Thousands of​ people spend a​ lot of​ time studying the​ economy,​ and even the​ financial experts who predict market conditions often get it​ wrong .​
It’s impossible to​ foresee how interest rates will change – although you​ may be able to​ apply common sense to​ a​ certain degree,​ there is​ no guarantee that a​ fixed rate mortgage will beat the​ SVR five years down the​ line .​
Ultimately,​ you​ have to​ make the​ best decision you​ can based on​ the​ situation as​ it​ stands.
You should also check to​ see if​ the​ fixed rate mortgage is​ portable – this means that if​ you​ want to​ sell up and move house during the​ tie-in period,​ you​ can transfer the​ mortgage to​ your new property without incurring any penalties.




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