Fixed Interest Rate Mortgages
A fixed interest rate mortgage is where the interest rate will remain the same for a set period of time. So, with this mortgage type, you will not be affected by interest rates going up or down for a set number of years. Unlike a variable rate mortgage, you will have peace of mind as you will know the exact amount you will have to repay monthly during this initial period. Currently, on the market, there are more fixed-rate mortgages available than any other type of mortgage deal, as they are popular with both lenders and homeowners.
Fixed-rate home loans can last between one to 15 years, although 15-year deals are less common. The most current common fixed rate terms for a mortgage are two, three, five years.
The period that you should fix should be carefully considered and this is where we can give you guidance. It is also common for fees to be charged by the lender for mortgage schemes (not just fixed rates) and we will work out for you what is the most cost effective option given your needs.
Often the lowest rates have the highest fees but these do not always make for the most cost effective solution. As Whole of Market advisers we will consider lots of options for you.
When it comes to fixed term mortgages, the longer your deal is set to last, generally the higher the interest rate will be on the mortgage. This is because it is more difficult for the lender to predict what will happen in the market over longer time periods. So, in this situation, you are basically paying for the security of knowing that the interest rate will not increase irrespective of what is happening in the market, for a specific period.
Once a fixed rate period has come to an end, you will be transferred onto a standard variable rate mortgage by your lender. Each lender sets their own standard variable rate, and this can change by any amount, at any given time.
It is advisable to consider remortgaging to a new deal once this happens to make sure you continue to pay as little as possible (and maybe obtain the stability of a fixed payment again). This could be with your existing lender or a different provider. We can start to look at this up to 6 months before your current fixed period is set to end.
For further advice on fixed interest rate mortgages, get in touch with us here at Stuart Brown Mortgage Services today.
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.
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