Fixed rate mortgages are ones where the interest rate does not change during the agreed period of the loan. This can help you when planning your repayments and cashflow.
If you take out a fixed rate mortgage you can be sure that the amount you pay each month will remain the same for a certain period of time. This means that a fixed rate mortgage can provide a degree of stability and allows you to budget effectively.
It is a common choice with borrowers, especially first time buyers, and there are a large number of fixed rate deals on the market. The fixed rate period is typically between 2 and 5 years although longer periods are available.
So, there are a number of positive aspects to fixed rate deals - is there any downside?
The "price" of fixing your rate is that there will be a cost (Early Redemption Penalty) if you want to get out of the deal during the fixed rate period. This is typically expressed as a percentage of the loan and, therefore, could be expensive. If you want to move during the fixed rate period, your lender may not offer additional funds and, if they do, it may be on more expensive terms than your current deal. Also, when you reach the end of the fixed rate period you will move on to your lender's standard variable rate which, depending on interest rates at the time, may be significantly more expensive.
As with any other financial decision, whether a fixed rate mortgage is the best option for you comes down to your personal situation now and in the future and, as importantly, what makes you feel comfortable. Talking to a professional adviser can help you decide. If you wish to speak to an LGBT-friendly financial adviser, please enter your postcode under the map on your right, to find an adviser near you.
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