Fixed Rate Mortgage
As the name suggests, a fixed-rate mortgage is a type of mortgage that maintains a fixed repayment interest rate for a period of time, irrespective of any changes to the Bank of England set interest rates. The time periods for fixed-rate mortgages are generally anywhere between 2 and 5 years although there are some lenders who will offer up to 10 years.
Advantage of Fixed Rate Mortgage
Unlike other mortgage types such as the tracker or discounted mortgage, whose monthly repayment rates fluctuate in accordance to changes in the Bank Of England interest rate, a fixed rate mortgage remains the same every month throughout its time period. Therefore, if you have a mortgage with a fixed rate of 4% over 4 years you will be charged at that rate each month for 4 years. For many this can be a real advantage as the mortgage holder will know exactly how much he or she needs to pay out every month and so can budget accordingly.
Disadvantage of Fixed Rate Mortgage
Of course, as with all mortgage types, the fixed period can have a down side as well. If you sign up for a fixed rate mortgage the likelihood is that you will be required to be ‘tied-in’ to that mortgage for the duration of that fixed period. In other words, you would be unable to switch lenders during that period without incurring costs, often quite expensive. This therefore means that you would be unable to switch your mortgage in order to reduce payments should the National interest rates become lower during this period.
As with all mortgages it is essential that you select the right type to best suit your individual needs. Whichever mortgage type is best for you www.get-a-mortgage.net is here to help. Fill out our simple form today and let one of our completely independent financial advisors give you a NO OBLIGATION consultation on a mortgage deal that meets your needs.
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