Fixed Rate Mortgages

You know exactly what you’re getting with a fixed rate mortgage. One fixed re-payment that never fluctuates, month in, month out. That’s why they’re perfect for those of us who like to budget. It doesn’t matter how high the interest rates get, your monthly mortgage payments will stay at the agreed level, making budgeting just about as straightforward as it can be.

You can of course shop around for fixed rate mortgage schemes at attractive rates, based on various factors, including: how long you’re tied into the scheme; the scale of your initial down payment and even the economic climate at the time of investment. If interest rates are stable, your broker should be able to procure a better deal based on the reduced risk to the lender.

Fixed rate mortgages are certainly good news for those of us keeping tabs on the interest rates too. If the interest rates look like skyrocketing, then the mortgage rates will follow; and there’s no better time to invest in a fixed rate mortgage to circumvent the increasing payments. It’s no surprise that so many of us are investing in fixed rate schemes; we’re afraid of the inevitable backlash that can clobber our variable rates when the interest rates peak, and we’re looking for a little old fashioned peace of mind!

And that’s why fixed rate mortgages are the ideal form of repayment for anyone on a fixed income. There’s nothing better than knowing that, come the end of the month, you’ve got the mortgage covered and you can still afford to live the life you love. And because you already know that you’re not going to be making any overpayments – or pay off your debts prematurely, there’s no need to worry about the early repayment charges applied in the initial stages of fixed rate mortgage plans. So if circumstances should change, you can just wait until the fixed rate expires, before paying off the mortgage in bigger chunks.

Bear that in mind. Your fixed rate will expire, unless it is set in stone for the term of the mortgage. That means you will eventually revert to the lender’s standard variable rate, whether that is two, five or ten years down the line. But don’t worry too much. ‘Discount rate’ mortgage deals like this give you the all the security of an initial fixed rate mortgage, but with the extra incentives of a variable rate at the curtailment of the agreed period. The principle advantage is of course that your payments may suddenly fall in line with the Bank of England base rates. And even if they don’t, you can see for yourself if the balance between higher and lower rates that you’re bound to incur over say, a five year period, can still work out cheaper than paying at a higher rated fixed rate. Get some figures online for the past five years and find out, or ask a mortgage broker for help. You might just find that the best of both worlds is actually achievable.

But if that’s not the game you want to play, then plump for the longest fixed rate scheme you can find. Don’t forget to ask your mortgage broker to opt out of any schemes that incur a redemption penalty. That will enable you to switch schemes immediately upon completion of the fixed rate period, without incurring any charges.

The fixed rate mortgage is for everyone who likes to know exactly what’s expected of them. It takes a lot of the misery out of the monthly mortgage payment; and that in itself has to make it worth its weight in bricks and mortar!