Fixed Rate Mortgage, Who What Where When How? | Mortgage

Fixed Rate Mortgage, Who What Where When How?

by MontyBurn

Let's begin with a quick explanation of what exactly is a fixed rate mortgage? It's a mortgage where you get to agree on a period of time (say a few years) where you have a fixed interest rate. It won't alter for the length of the fix.

How does the fixed rate mortgage help me you say? It helps shield you from any interest rate rises that could increase your payments.

Interest rates can go up quite alarmingly as well! Imagine now how you are going to cope with paying 30% 40% or even 50% more per month than you were six months ago?

With your fixed rate you are sitting pretty knowing that next months payment will be the same as last months.

When should you choose against a fixed rate mortgage?

You should choose not to fix if you think you may be moving home, or even lender, during the potential fixed period.

The reason being is that it could cost you many thousands in a redemption fee if you decide to bail out during the fixed period.

Of the reasons you may need to cancel a fixed deal are job losses and extra children. You may need an extra bedroom or have too many rooms depending on your circumstances.

Either or all of the above reasons could cost you dearly if you have to break a fixed rate mortgage deal.

An extra plus point to these fixed deals is you don't have to keep one eye on the big banks to see if they are raising the rates.

So in conclusion you have a lot of questions to ask yourself before you think of taking one of these fixed rate mortgage deals.

Not least you have to ask yourself how do you handle risk? Are you a gambler or do you play it safe?

You've got your answer to what a fixed rate mortgage does. And importantly what it doesn't do. It's time to get yourself fore armed with the best possible info before you go into the ring with these lenders.

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

Monty Burn wrote a bestselling book called the Mortgage Bible, grab your copy at his site Mortgage Watchdog or discover how to get the best fixed rate mortgage deal. Insider info there for the taking.