Fixed Rate Mortgages – The Pros and Cons of Fixed Rate Mortgages
Could a fixed rate mortgage be the security you need to get on the property ladder?
As everyone knows, the financial climate can be difficult to ascertain. There are so many variables that could have your comfortable monthly payments pinching thinner and thinner. One way of being sure of how much you will be paying is a fixed rate mortgage; for typically up to ten years, no matter what the interest rates on mortgages are doing, you can be certain of repaying a fixed amount each month. It sounds like an excellent way to be more certain of what is likely your biggest expenditure, but is a fixed rate mortgage right for you?
The first and most obvious point is that a fixed rate mortgage will allow you to know for certain how much you will be repaying each month. Whether interest rates rise or fall, you have the security of knowing that you won’t be facing any unforeseen charges, giving you the freedom to more accurately predict your outgoing expenses. Knowing with certainty what you will be spending is arguably invaluable towards keeping on top of your money. With this security, even as the end of your fixed rate arrangement comes closer, you have the freedom of searching for the best deal once your repayments become subject to interest rates.
… And the not-so-good
Of course, as interest rates can rise, so can they fall; there is no guarantee that you won’t find yourself paying more during some periods with your fixed rate than you would with a variable rate. On the flipside, once your fixed rate period draws to a close, due to variables you may find a sudden and quite jarring jump in your expenses. Many of the best fixed rate mortgages out there charge a considerable arrangement fee, and should you wish to repay some or the entirety of your mortgage early or change your arrangement, it also come with significant early repayment charges. Whether these points make it dealmaker or a deal breaker, it is always advisable to consult a professional; visit newcityfinancial.com for quality advice on what type of mortgage is right for you.