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"
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