Fixed Rate Mortgage
A fixed rate mortgage provides assured payments for a prearranged
period. Since you are sheltered from rising interest rates, you
can set your budget with confidence. Fixed rates bring safety
and peace of mind for security, which some people find invaluable.
When you are looking at a debt the size of a mortgage, knowing
the exact amount going out of your bank account each month can
be reassuring. But you must bear in mind that by fixing your rate
you are taking a gamble on interest rates.
Fixed rates are available for between six months to twenty-five
years, with two to five years being the most popular. If you fix
for, say, five years, and the interest rates rise beyond the level
you have fixed at in that time, you have made a shrewd investment.
On the other hand, should rates fall during the fixed period,
you will have lost out. That is the risk you take and the price
you pay for fixed rate mortgages, but you do get peace of mind
rolled in with the price. You could look at fixed rate mortgages
as a type of insurance. We pay premiums to insure our property
against fire and theft. Why not pay a fixed rate to insure against
rising general interest rates?
If the lender offers a fixed rate or I discounted variable rate
mortgage, it may charge a penalty if you decide to cash in on
your loan before the fixed rate or discounted loan has run out.
Beware – this penalty can run to thousands of pounds.
Watch out, as some lenders charge a redemption penalty, even after
the fixed rate or discounted rate period has run out. These are
known as ‘overhanging’ redemption penalties, because
they overhang your deal.
If its a mortgage deal for bad credit you seek, visit Bad
Credit Mortgages for a wide aray of top rate deals.
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