Choosing a fixed rate mortgage

                                                                                         

Understandably when it comes to mortgages, borrowers are opting for fixed rate mortgages so they can rely on their interest rate remaining steady and plan a budget for the months ahead.

One in three of us are opting to fix our mortgage rates for five years or more and the main reason for this is certainty. More and more people are now fixing their mortgage rates for five years rather than two years, and I suppose they’re trying to make their financial stability last as long as possible…

This is quite a surprise as interest rates are expected to decrease in the New Year, however there are a few people predicting more interest rate rises instead.

For most people a mortgage is the biggest financial decision we have to make in our lives. It’s no surprise that most of us simply want to know exactly how much we have to pay out each month, which is why fixed mortgage rates are becoming so popular.

You can’t predict the future but at least if you’re on a fixed rate mortgage product you know exactly how much your mortgage will cost you every month, for the length of the fixed term period. You should try to make sure the deal is right for you and be sure to read through all the terms and conditions paying special attention to areas like Early Redemption Penalties. This is usually a fee calculated as a percentage of the total amount you’re borrowing. The percentage decreases as you move towards the end of what is called a ‘tie in period’. For example a five year fixed mortgage rate may mean you are tied into the product for five years (the term of the fixed rate offer). If you need to move or pay off the mortgage within the first five years you are usually charged a percentage of say five per cent in the first year, four per cent in the second year, three per cent in the third year, two per cent in the fourth year and one per cent in the fifth year.

There is huge consumer demand in the UK for fixed rate mortgage products and there are now plenty of ten and fifteen year fixed rate deals available. Good news for those of you who want to fix for financial security.

About the author:
Simon Duffy writes for the Financial Blog a UK Finance Blog talking about all aspects of personal finance including loans blogs, credit cards blogs, mortgages blogs, insurance blogs and more.

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