Fixed Rate Mortgage

The fixed rate mortgage is one of the most popular mortgage products on the market at the moment as a direct result of the changes that have occurred in the financial market in the last twelve months or so. Unless you have been paying no attention at all, you will know that UK interest rates have risen several times and this spells bad news for homeowners and potential homeowners. The more interest rates rise the more expensive a mortgage will be over the course of the loan, but this is where the fixed rate product comes in rather useful!

The fixed rate mortgage is designed in the same vein as a regular loan – it has one set interest rate for the duration of the deal period. As such, you pay one fixed monthly payment every month. Your payments will never go up or down so you know exactly where you are and can budget accordingly. The lack of confusion reduces the risk of you missing payments or not paying enough so you can plan for the day that you own your home free and clear!

Homeowners have rejected the fixed rate mortgage in the past because the interest rate is often set a way above the base rate to cover the lender’s costs of interest rates going up and down over the course of the mortgage. If interest rates drop, you could end up paying more than you should. However, recent instability has ensured that the fixed rate mortgage has made a name for itself as a steadying force in the lives of homeowners and now it effectively appeals more than ever. The risk of paying a little too much is nothing compared to the risk of not being able to afford your home if interest rates rise dramatically, after all!