5 Reasons To Take A Fixed Rate Mortgage | Mortgage

Let's first have a think about the bad points to a fixed rate mortgage before we get to the good points. There's always bad points, we know that.

by MontyBurn

Let's first have a think about the bad points to a fixed rate mortgage before we get to the good points. There's always bad points, we know that.

There's usually always a redemption penalty if you have to redeem (cancel the mortgage) early. You may move home or simply remortgage. Doing so would cost you.

There's a nasty thing called a setup charge. Why they exist I don't know. We have to shell out for them and they look like they'll be around for a long time.

Possible sharp increase when the deal ends. As you've been on a fixed rate for a period there's a chance of a sharp rise when the deal finishes as you go on a normal variable rate.

There is of course the chance you could have a bit of a drop as well, which wouldn't be so bad.

If interest rates go down during your deal you could be paying more than people on SVR's. It's a bitter pill to swallow but unavoidable.

There's also the chance of the opposite though. Rates rise and you are sitting pretty with your fixed rate.

Negative points laid out, let's look at what I think are the top 5 reasons to get a fixed rate mortgage.

1) Get a good nights sleep knowing the payments will not yo-yo from one month to the next

2) Steady payments every month let you know exactly where you stand financially.

3) If you are on a tight budget you get complete control over your budget. Which could be essential.

4) You have no risk, and having no risk does away with any worry you may have on a variable rate mortgage.

5) The actual interest rates are often slightly lower with fixed rate mortgages than normal SVR's. Making them cheaper.

To wrap up I think a fixed rate mortgage is a better option than an SVR one. There's good and bad in both but you would be sheltered from rate hikes that have occurred in the recent past. There was a 10% hike once, in a very short time.

This means your monthly payments would be really making you lose sleep. Rising like crazy in mere months. You not only lose sleep, possibly even your house! Food for thought.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

Monty Burn published a bestselling book called the Mortgage Bible, grab your copy at his website Mortgage Watchdog or learn how to get the best fixed rate mortgage deal. Free insider info there for the taking.