Fixed rate mortgages — more information
There are basically two kinds of underling
mortgage arrangement to any contract:
1. Interest only
2. Principal and interest
Compare UK fixed rate mortgage interest rates online
This page is designed to give the "pros and
cons" of the fixed rate mortgages . If you want to compare
your mortgage, or look at the possibilities for a new mortgage
on fixed interest, click here:
Fixed interest arrangements are an interest
repayment variation on a basic "principal and interest"
approach.
The lender agrees to fix the interest rate
for a set period of time - usually between 1 and 5 years.
After the agreed period, the interest rate
owed usually reverts to a Variable Rate.
Pros: You can plan to a known budgetary situation,
over time. No changes.
Cons. In times of low interest rates payments
may be higher than on a variable rate mortgage. If interest
rates might rise? With a fixed interest mortgage you're
not gambling with your home.
If you want to leave before the agreed term
there is usually a serious early redemption penalty. For
example you may be charged six months gross interest if
you leave a five-year fixed rate agreement.
Some penalties could even go beyond the fixed-rate
period. This would be an "overhanging redemption penalty".
Always read the small print and ask as many "stupid
questions" as you feel like. You must be clear on what
everything means.
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