Fixed Rate & Capped Rate Mortgages
Fixed Rates
A fixed rate or fixed term mortgage is a common type of mortgage scheme where the rate of interest is fixed (and so you know your payments will not change) for a defined period of time.
Fixed interest rate mortgages tend to be offered in 2, 3 & 5-year terms but market forces and the lenders trying to offer competitive products can lead to longer (and shorter) terms being offered too.
Although not as common we have had lenders offering 7, 10, 15 & 25 year fixed rates in past years.
The rates on offer will differ so, for example, a 2 year fixed rate is often cheaper than a longer 3 or 5-year scheme.
The longer period scheme can often also have higher early repayment charges to come out of it, although by nature it will also give a greater period of stability and reassurance that the mortgage will not be affected by interest rate fluctuations for a lengthened period.
If you have any questions on fixed rate home loans, contact us today to find out further information about fixed term mortgages.
Capped Rates
Capped rates are sometimes offered in conjunction with tracker schemes. A capped rate is essentially where, for a specified period, the interest rate charges will not rise above a specific rate ‘The Cap’.
The benefit of a capped rate mortgage is that it can give you the best of both worlds i.e. a pay rate that can reduce if interest rates fall but the certainty, for a specified period, that it will not rise above a certain level too.
It is important to note that some capped rates will also have ‘collars’, effectively a minimum rate that will be charged (the rate you pay can only reduce to a certain level).
Capped rates are not a common scheme and can have a slightly higher pay rate than an equivalent fixed rate.
Early Repayment Charges (ERC’s)
Most schemes will have early repayment charges attached to them which mean if you do not keep the mortgage under the agreed scheme, for a specified period, then a penalty or ‘early repayment charge’ would become payable.
These charges are often expressed as a percentage of the loan being repaid and as such can run into thousands of pounds.
This is one aspect we will cover with you when shopping around for a suitable scheme.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage.
Can I get approved for a mortgage? Getting approved for a mortgage can be a stressful process as it is one of the most important steps in the home buying or remortgaging procedure. Here at Stuart Brown we are available to help you through the process of gaining approval for a mortgage and can offer you expert advice before you submit your application.
Our Testimonials
“Stuart and Sharon have arranged a buy-to-let mortgage, a mortgage for our first home together, a re-mortgage and have now helped us port over our mortgage to a new house. The service they have provided has been consistently amazing, especially as our purchases have never been straight forward. I would recommend them to anyone.” Dominic, Surrey
“Stuart was recommended to me by a friend and I would certainly continue that recommendation. He is very thorough and ensures you know all the options. Stuart makes the process clear and you feel
informed the whole way. Thanks Stuart” Danielle C, Hemel Hempstead
“Stuart is an expert in his field, giving great objective advice after careful and deliberate diagnosis of what we were after. I can confirm he is also a very patient man. Highly recommended!” Alex C, Leighton Buzzard
“Remortgage quickly sorted out today via phone/email. All options explained and discussed and I’m very happy with the outcome. Thoroughly recommend.” Craig B, Sunny Scotland
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