As experts predict increasing mortgage interest rates in the new year, more people are considering switching to
a fixed rate deal. Before making that switch to a fixed rate, there are some factors you may want to consider.
A fixed rate mortgage lets you fix the rate of interest, and therefore your monthly repayments, for a set number of years. When the deal has ended, the mortgage interest rate reverts to the Standard Variable Rate. This could mean your monthly repayments may increase.
There are many benefits of having a fixed rate mortgage, with the security of knowing how much your payment will be each month being one of the most popular. If you have limited income and would prefer to be able to budget each month, consider a fixed rate deal. A fixed rate will protect you if the interest rates do increase, as you will pay the same amount each month until the deal ends.
If at all possible, try to save some money each month while you have a fixed rate deal, so that if your monthly payments do increase by a large amount after the deal has ended, you have some savings to help you manage. Check what the financial penalties are if you decide to repay your mortgage early. This may not be important at the time of negotiating a new mortgage deal, but if you come into some money, you don’t want to end up paying a large penalty for repaying your mortgage.
For the best advice before making any decision, talk to a mortgage adviser who is CeMAP qualified.
