What is a Fixed Rate Mortgage?

As the term implies, with a fixed rate mortgage the mortgage rate is fixed for a set clip period of time, so no matter what motions happen in the lender's criterion variable mortgage rate, the borrower's arrangement is fixed and, therefore, so are the monthly fixed rate mortgage payments.

A fixed rate mortgage would accommodate person who wishes to cognize where they stand. A fixed rate mortgage, as suggested by the name, is a mortgage where equal repayments are made every month.

Fixed rate mortgages allow you to easily manage and program your monthly outgo - because the payment will be the same every calendar calendar month and you won't be affected by any rises in the alkali rate. If the interest rates rise above the fixed rate on your mortgage, you will see the existent benefits of the fixed rate mortgage.

A fixed rate mortgage do it easy to program ahead, because as the name suggests, the interest rate on your mortgage stays fixed.

This agency that as a fixed rate mortgage customer, even if the Bank of England Base Rate changes, the interest rate on your mortgage remains changeless over a fixed clip period of time. This do your budgeting easier, because you can be after ahead knowing exactly how much your monthly repayments will be.

The fixed rate time time time period can be anything between six calendar calendar months and five years, but it's always best to mention to a financial services professional before deciding what period of fixed interest rate to choose.

The biggest advantage of a fixed rate is that irrespective of fluctuations in interest rates, your monthly repayments stay the same throughout the period of the fixed rate - usually six months to five years.

A fixed rate mortgage is suitable if your mortgage repayments take up a large proportionality of your income as it protects you from rises in interest rates. However, you would not profit from any reduction in the lenders standard variable rate.

Fixed rate mortgages generally incur a punishment if redeemed within the fixed rate period.

The advantage of a fixed rate mortgage is that you cognize exactly how much your mortgage will cost, and for how long. If interest rates on your mortgage rise, well the fixed rate will not. Conversely, however, when mortgage rates drop, your fixed rate mortgage will not driblet with them.

The cardinal benefit of a fixed rate mortgage is that you are able to accurately budget your repayments for a set clip period of time. In addition, fixed rate mortgages are an first-class option, if it goes evident that interest rates may be rising over the approaching years, as you can protect your mortgage repayments against rises by choosing a fixed rate mortgage.

You may freely reissue this article provided the author's life stays intact:

About The Author