A fixed rate mortgage is a loan where the interest rate remains the same throughout the loan repayment period.
This could benefit those of us who have a steady income and are aware of our outgoings each month in relation to the outgoing loan repayment for the mortgage. I have a few friends that have a fixed rate mortgage and they find it easier to be able to plan ahead for the next few years, because they know exactly what they will be paying. If you are struggling to find suitable work or have had a history of bad financial problems, then perhaps the fixed rate mortgage will not work for you, as paying a set amount each month could easily land you in debt.
On 17th September 2008, the Daily Mail reported that fixed rate mortgages have dropped below 5% as competition returns to the market. This is good news for buyers and current fixed rate mortgage holders. However, it was also reported that the cheaper 2 year deals have come with a catch, which means there is an arrangement fee of more than £3000.
The cost of a three-year fixed rate mortgage has fallen by around 0.56 per cent, while best buy five-year deals are down by an average of 0.4 per cent.
Does this mean that people are going to prefer to rent? Perhaps many of us will wait until this mess has been sorted out before trying to get on the property ladder or even considering taking out any sort of loan. I think people are genuinely frightened by the housing crisis at the moment and the fact that our property could be worth less than it was 10 years ago.
A fixed rate mortgage might seem like the best option, but it is more a case of who will be able to get one at the moment and is it worth even trying?
No comments:
Post a Comment