| One of the most important decisions you will | | | | rate is lower than that of the tracker or |
| make in your financial life is which mortgage | | | | variable rate mortgages. |
| you should get. For many people, the option | | | | |
| of a fixed rate mortgage seems appealing. But | | | | Are there any drawbacks? |
| what exactly is a fixed rate mortgage, and | | | | |
| why do so many people choose this option? If | | | | There are drawbacks to getting a fixed rate |
| you are new to mortgages then this article | | | | mortgage. The biggest drawback is that the |
| will let you know a little more about fixed | | | | interest rate is usually higher than that of |
| rate mortgages and their benefits. | | | | variable rate mortgages. The added security |
| | | | comes at a price, in that you have to pay |
| What does fixed rate mean? | | | | more in interest over the length of the |
| | | | mortgage. Also, the 'fixed' rate is usually |
| A fixed rate mortgage is fairly | | | | only fixed for a certain number of years, |
| straightforward, and does exactly as the name | | | | usually 2 or 3, after which the rate can be |
| suggests. A fixed rate mortgage has an | | | | put up and then fixed for another period. |
| interest rate that remains the same | | | | This can mean that your mortgage will be |
| throughout the mortgage term, meaning that | | | | cheap now, but in the future the rate could |
| your monthly repayments will remain the same, | | | | rise. |
| allowing for inflation of course. | | | | |
| | | | Who should get fixed rate? |
| Why a fixed rate mortgage? | | | | |
| | | | Despite its drawbacks, there are many people |
| Many people choose fixed rate mortgages | | | | that should definitely opt for fixed rate |
| because of the security and peace of mind | | | | mortgages. If you are on a tight budget and |
| that they provide. If you have a fixed rate | | | | have a fixed income each month, then you |
| mortgage, then you know your monthly | | | | cannot afford for your payments to rise. |
| repayments will not change, meaning you can | | | | Having a fixed repayment each month means |
| budget effectively for both the short and | | | | that you know you can make the payment even |
| long term. If you have a mortgage with a | | | | if national interest rates rise. Also, if you |
| variable rate of interest then your payments | | | | can get a deal whereby the starting interest |
| can change depending on market fluctuations. | | | | rate is lower than that of a variable rate |
| This can leave you paying less, but often | | | | mortgage or even the same, then opt for the |
| leaves you paying more each month. The best | | | | fixed rate mortgage. |
| times to get fixed rate mortgages are when | | | | |
| competition is high, and the fixed interest | | | | How to decide? |