Fixed Rate Mortgages

What are fixed rate mortgages?

Do you like certainty? Do you like to know what your monthly outgoings will be with as much certainty as possible? If your largest regular expense is fixed for a period time, would that be a great advantage to you? If so, perhaps a fixed rate mortgage is for you.

With fixed rate mortgages it sets the interest rate you will pay for a specified period. This will guarantee the amount that you pay for each month for the agreed period of time. Once the fixed time period is at an end, your repayments will be at the lender's standard variable rate.

The obvious advantage of this is that should you need to budget carefully over the first few years of your mortgage, you will be able to with a fixed rate deal. You will know how much you have to pay each month, and should the base rate rise you will not be caught out with sudden increases in payments. Should the interest rate rise above the fixed rate that you are paying, you will actually be saving money in real terms.

Don't forget that the reverse of this is also true. If the interest rates go down whilst your fixed rate deal is in place, then you will lose out. However, you will at least still know how much money will be coming out of your account each month, and there is a value on that.

The specified period for the fixed rate is usually between six months and up to five years. In order to take advantage of the best rates, you should look at the deals from one to three years. Some lenders will offer some very long term fixed rates, such as 10 years or even for the life of the mortgage term.

In order to decide how long you want the rate to last for, you should take advantage of the internet and the print media and read up about the Bank of England interest rates. Try and work out whether you think they are going to go up or down. If you think they are about to go up then a fixed rate is a great idea, if you think they will go down, then this is still OK, as long as you value the comfort of knowing what your repayments will be.

In the past variable rates have been up as high as 18%, and are now at 4%, so you never know what could happen. If you think you know that it will go down, then a base tracker mortgage may be the better product for you.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2009

arrowMortgage Advice

Ask About

UK Mortgage Advice
 > Mortgage Basics
1. How to Select the right Loan or Mortgage
2. Considerations when selecting the interest method on the mortgage or loan
3. Considerations to consider on mortgage or loan lenders
One-Off Mortgage Costs
> Mortgage Options
> 100% Mortgages
Buy to Let Mortgages
Whether to Buy or Rent a Property
Base rate tracker mortgages
Capped rate mortgages
Cash Back mortgages
Current account mortgages
Discount mortgages
Endowment mortgage
First time buyers mortgages
> Fixed rate mortgage
Flexible mortgages
Home improvement mortgages
ISA mortgages
Non-standard mortgages
Offset mortgages
Pension mortgages
Remortgaging
Self-Build mortgages
Self-Certification Mortgages
Mortgages for the Self-Employed
Stepped rate mortgages
 > Tools & Tips
Top 10 Mortgage tips
Buy-to-let mortgage tips
Moretgage Jargon Buster
Mortgage Calculator
Mortgage Lenders in the UK
Home buying process
Property Viewing tips when buying
Making an Offer on a Property to Buy
Mortgage Completion on a Property
A Property Survey for a Mortgage
Property Conveyancing for a Mortgage
> Dangers
With a buy to let mortgage
With discount mortgages
With remortgaging
With a self-build mortgage
> Problems
Adverse or Bad Credit Mortgages
Bad Credit Mortgages
Problem mortgages
> Other Considerations
Northern Ireland Mortgages
Mortgages Scotland
Mortgages Wales