What is a fixed rate mortgage?
Dreams of owning your own home may be unfulfilled if you can’t afford payments due to the ever rising interest rates. If this is the case, a fixed rate mortgage may beneficial because the interest rate will not change during the term of the loan.
When you apply for a fixed rate mortgage, you can calculate future monthly payments with certainty because the interest rate is fixed, and your payments will not vary. However, if interest rates fall, you are stuck with the interest rate you agreed upon at the beginning of your mortgage term.
Why do I want a fixed rate mortgage?
When you want to calculate what your monthly expenses are going to be so that you can plan for the future, a fixed rate mortgage, as the name suggests, stays fixed. This allows you to be certain that your payments will not increase or decrease during the term of your loan. Fixed rate mortgage period is very short between, commonly between two to five years.
With a fixed rate mortgage, you calculate the term in which you will pay off all the principal and interest, and you will arrive at a monthly payment. Your monthly payment remains constant throughout the entire term of the fixed rate mortgage.
For first time buyers, fixed rate mortgages may be a good option since with variable rate mortgages your payments will fluctuate according to the Bank of England Base Interest Rate. However, with a fixed rate mortgage you know exactly what amount you will need to pay each month, regardless of changes in interest rates.
What are the disadvantages of a fixed rate mortgage?
With a fixed rate mortgage, even when interest rates decrease, you will have to pay the same amount of interest you agreed on at the commencement of your loan term, even if it is higher than the current interest rate. If this becomes a problem, it may help to speak with a mortgage lender or counselor who may be able to help you figure out a better payment option.
When you opt for a fixed rate mortgage you will be charged a penalty (called a redemption penalty) if you wish to change the terms of your mortgage or pay it off completely or in part before an agreed upon date. Often, these redemption penalties are fixed at a level that would make it uneconomical to change the mortgage or transfer to another lender before the agreed upon date.
If you'd like help finding the best fixed rate mortgage loan for you, take a minute to fill out out short questionnaire, and a SimplyFinance representative will contact you shortly to introduce you to a mortgage broker. Your broker will work and search to find the best fixed rate mortgage deal for you.
http://www.simplyfinance.co.uk
http://www.simplyfinance.co.uk/Mortgage.html
- Related Articles
- Related Q&A
- Construction Loan Mortgages Finance Dream Homes and Vacation Properties
- Best Loan Mortgage Refinance
- Best Home Loan Mortgage Rate Refinance
- Application Loan Mortgage
- Home Loan Mortgage Rates: What You Need to Know
- California Home Loan Mortgage Rates
- Bad Credit Lender Loan Mortgage: Tips for High-Risk Borrowers
- Bad Credit Loan Mortgage Rate And The Good Lender
Cash Back Mortgage Refinance for the Holidays
By: MPetrone | 27/11/2009Get extra cash for the holidays by refinancing your mortgage. Cash out refinance is one way a homeowner can easily get a large sum of money, with low interest rates. This is especially a popular option around the holidays as homeowners feel the effects of having no cash. Many people are able to get cash from their homes equity before Christmas. Find out how:
America Wakes Up
By: Regis Sauger | 27/11/2009The authors view of a new phenomena happening in the foreclosure arena. An example of American ingenuity without the aid of "jolly no-doers" in Washington and the "greedy sharks" of Wall St.
What To Do If You Want A Mortgage With Poor Credit?
By: Sarah Reddingworth | 27/11/2009Poor credit ratings are problematic. Those nice mortgage interest rates are more difficult to apply to, so what are you to do? In this article, we will delve deeper, and find the right combination for success!
Mortgage Bailout Plan - New Mortgage Refinancing Options
By: MPetrone | 27/11/2009With the financial problems that millions of homeowners are facing, foreclosure and mortgage default are at all time highs. To counteract this, the Obama administration has enabled a $75 billion stimulus program to bailout homeowners, and stop homes from being lost. Millions of homeowners can now use these programs and get a mortgage refinance or modification for themselves. Here is how it works.
FHA Loan FLorida, FHA mortgage Florida
By: FHA home loan Lender | 27/11/2009The FHA home loan is a very popular route for Florida first time homebuyers. But it's not reserved only for Florida first time home buyers. You can buy your third or fourth Florida home with an FHA home loan. The only stipulation is that you may only have (1) one FHA home loan at a time.
How To Find A Mortgage With A Poor Credit Rating
By: Sarah Reddingworth | 27/11/2009A poor credit rating can effect finances. A negative spiral it is called, and can cause havoc with finances, let us find what we need to get out of this. Let us find a mortgage and buy a home!
Bad Credit Florida FHA Loans down to a 530 FICO
By: Florida Mortgage | 27/11/2009Getting a Bad Credit Florida Mortgage with Bad Credit isn't as easy as it was a year or two ago. However, it isn't as impossible as some news reports make it seem. Even Floridians with bad credit reports which reveal past financial sins still sometimes get to the promised land of mortgage approval. Most Home Buyers and Refinance clients do so with the help of a skilled and experienced Florida mortgage lender who specializes in Florida bad credit home mortgages.
Mortgage Vs Renting
By: David Nalin | 27/11/2009Recent economic downturns have fairly well focused on the mortgage lending market, where terms have loosened allowing more people than ever in Australian history to buy a home. Although the slipping economic times cannot be blames solely on a requirement-reduced lending atmosphere, a return to more traditional mortgage lending practices have many people thinking their only choice for shelter is to rent.
The Importance of Mortgage Protection Insurance
By: Jon | 17/06/2008 | MortgageMortgage protection insurance is extremely important if your home and its meaning to your loved ones are of matter to you. If for some reason (death or unemployment due to an injury) you cannot pay your mortgage, this insurance will either pay off your mortgage or make your payments until you are able to go back to work.
Making an Auto Insurance Claim
By: Jon | 17/06/2008 | CarsHalf of one million people each year are injured in motor accidents and are entitled to compensation. Many of these people are unaware of the rights they have or are even unaware of how to make a claim to this compensation. Unfortunately, these people lose out on money due to them for pain and suffering.
Money Saving Potential in Tracker Mortgages
By: Jon | 29/05/2008 | MortgageOne very underused resource in the mortgage industry is the tracker mortgage or rate tracker mortgage. Due to a general lack of knowledge about tracker mortgages, borrowers tend to go for fixed rate or variable rate mortgages.
Equity Release Explained
By: Jon | 29/05/2008 | MortgageEveryone, not just UK citizens and residents, dreams of owning their own home. But once you own your home, your investment is tied up in the property. What happens if you suddenly need an influx of surplus funds? Then you can opt for equity release. Here is an article to clarify the meaning and uses of equity release.
10 Tips for Next Time Buyers
By: Jon | 23/05/2008 | MortgageIn this article we provide some helpful tips and tricks to help you navigate the housing market to find the best mortgage deal for you.
Fixed Rate Mortgages
By: Jon | 23/05/2008 | MortgageWhat is a fixed rate mortgage? Dreams of owning your own home may be unfulfilled if you can’t afford payments due to the ever rising interest rates. If this is the case, a fixed rate mortgage may beneficial because the interest rate will not change during the term of the loan.
Boe Holds Rate at 5 Percent in May
By: Jon | 23/05/2008 | MortgageThis week, the Bank of England (BoE) made the decision to hold the interest rate at 5 percent for another month.