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