Fixed-Rate Mortgage
Monthly payments are fixed
Fixed for a set time period
sets your monthly expenditure…
Fixed-Rate Mortgage
With a fixed-rate mortgage, the interest rate remains the same throughout the entire deal period, typically, deals can be two to five years, although it can be possible to get 10-year fixed-rate deals.
When opting for a fixed rate, it means that for the period of time the fixed-rate deal is taken for. There’s no need to worry about being affected by any increases in mortgage lending rates via the Bank of England or your mortgage provider.
A downside of the security provided by fixed deals is that if interest rates were to fall during the term period of your deal. You could end up paying more than needed, the scale of which would be dependant on how much interest rates might fall below that of your deal rate. Usually, there might be a considerable early repayment charge (ERC) to switch to a differnt/better deal.
If mortgage rates increased considerably whilst on a fixed rate deal period, such effects won’t be felt until the deal period ends, especially if you move on your lender’s SVR.
Questions about Fixed-Rate Mortgage?
Here are some commonly asked fixed-rate questions
What is a fixed-rate mortgage and who is it right for?
A fixed-rate mortgage is a home loan with an interest rate that stays the same. The main benefit of fixed-rate mortgages is that they have relatively predictable payments. As each month’s principal and interest payment remains the same amount, for as long as the fixed-rate mortgage deal covers.
Can you pay more on a fixed-rate mortgage?
If you’re on a fixed-rate mortgage deal, usually you’re able to make extra payments during the fixed-rate period. How much these extra payments can be will be set within the deal agreement signed. But normally for a majority of lenders, the yearly total is set at 10% of the mortgage balance. If going above that amount in a 12 month period will/could attract penalties/extra fees.
THINGS TO NOTE
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