Fixed Rate Mortgages

October 16, 2016 by Pinnacle Mortgage Centre

Fixed Rate Mortgages

Fixed Rate mortgages have their advantages and we’re here to explain their ever growing popularity in what has become an uncertain market in recent years.

A fixed rate mortgage is, as simple as it sounds, a fixed rate of interest that is applied to your mortgage over a given period of time i.e. 2,3,5, or 10 years. The longer the fixed period, the higher the rate of interest as lenders seek to anticipate potential future interest rises.

The clear advantage of taking our one of these products can be seen as follows:

-        Certainty of payment over a given period of time.  This allows for budgeting, planning, and the knowledge that no matter what market conditions are this will not effect what you pay.

-        One mortgage fee per fixed period. The majority of mortgage arrangements will bring about what is called a “product fee” which is a fee applied to your account by the lender for securing that rate.  Consistent re-arrangements of your mortgage can bring about new fees, and this will chip away negatively in to your mortgage balance. With a long fixed period you can eradicate this.

-        Competitive rate today. Fixing your mortgage rate now could bring about a potential saving further down the line if rates were to increase. By securing your rate today you may benefit over higher interest rates in the future.

The EU Referendum, and the uncertain economy before this, has brought about a large rise in mortgages being fixed as consumers scramble to secure their largest outgoing. The benefits are clear, but also you must be aware that by fixing your mortgage there will be barrios to exiting this, with Early Repayment Charges often high which could eradicate any payments made over time.  If you are looking to move over the course of the fixed term, then it would also be wise to consider a fixed term mortgage that offers the ability to “port” your mortgage. This simply means transferring the mortgage over to a new property without paying any penalties. Any shortfall that may need to be made up could be applied for separately, therefore giving you the flexibility to upscale your home, if so required.

Of course, fixed rate mortgages are not the only option and you could opt in to a tracker mortgage that largely follows a certain rate above the Bank of England base rate, or go in for a completely flexible variable rate, which will be according to the lenders individual rate.  There are options to suit all needs and circumstances, and the motivation for the product must be clear.  But ultimately we can advise on what is the best option is for you and keep you well informed of all the relevant information.  So call, or e-mail, today to see what mortgage might be best for you.

Tel: 01702 831920
Email: info@pinnaclemortgagecentre.co.uk

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