Fixed Rate Mortgages
Fixed rate Mortgages – With mortgage and interest rates being so low at the moment, now is a great time to get a great deal on a fixed rate mortgage.
What are Fixed Rate Mortgages ?
When you choose a fixed rate mortgage the amount you pay every month will be fixed for a specified period of time, typically 2 to 5 years are the most common periods whatever happens to the Bank of England base rate and the standard variable rate offered by your mortgage lender.
What types of fixed-rate mortgages are on the market?
There are a massive variety of fixed-rate mortgage loans on the market. This type of loan generally lasts for between two, three or five years sometimes longer periods can be available.
When a mortgage borrower reaches the end of their fixed-rate term, the interest rate on their loan reverts to the standard variable rate offered by the lender. This is generally considerably higher than the fixed-rate deal offered.
What happens if I want to remortgage before my fixed-rate mortgage term expires?
Usually in this instance lenders will charge something called an early repayment penalty if you wish to cancel your fixed-rate mortgage within the fixed period and transfer to another loan. Some cheaper fixed-rate mortgages, including some of the best fixed-rate deals on the market, will continue to charge an early repayment fee even beyond the fixed-rate period. This is known as a ‘tie-in period’, and borrowers need to be aware of it when they take out a fixed-rate mortgage.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
For standard cases we typically we charge a mortgage advice fee of £595. For more complex cases we may charge a mortgage advice fee of upto £1,995. We may also charge an Administration fee of £295 and be paid commission from the mortgage lender. We will explain the costs involved with you before we proceed with any mortgage application.
What are the benefits of a fixed rate mortgage?
Fixed rate mortgages can be good for first time buyers and anyone on a budget who need the stability of a set monthly repayment. With a variable rate mortgage your payments may go up and down according to the Bank of England Base Rate. However with a fixed rate mortgage you have the security of knowing the exact amount you will repay each month for a set period, despite any changes in interest rates.
Having a UK fixed rate mortgage means the interest rate you will pay is set for a specified period. Once the fixed rate period is at an end, your repayments may revert to the mortgage lenders standard variable rate so you need to ensure you can afford the mortgage now and in the future when the fixed rate ends.
What are the major disadvantages of fixed-rate mortgages?
The major problems with fixed-rate mortgages are early redemption penalties and extended tie-in periods. For example if you wanted to amend your borrowing or remortgage during the fixed rate period. Fixed rate mortgages generally require an application fee from the lender to set up
In addition the lenders Standard Variable Rate ( SVR) could go below the fixed rate you are paying during the term, meaning you could be paying more than comparable tracker mortgages. Alternatively when the fixed rate period ends , you could face an increase in your mortgage payments, as the lenders SVR has risen higher than the rate you are paying, so you need to ensure you can afford the mortgage now and in the future when the fixed rate ends.