Fixed Rate Remortgage
When deciding to remortgage, it is important to be aware of market conditions, and which deals are available on the market at the time.
Remortgaging with a fixed rate will be in your interest if you want to fix your payments for a number of years, and if you can see interest rates rising in the future. Now is a time a lot of people are remortgaging onto a fixed rate, as interests rates are expected to rise at some point in the next year.
Before taking out a fixed rate mortgage it’s important to add up just how much you can afford, and what impact this rate will have on your overall monthly finances, especially if you have paid less money before.
The biggest advantage of a fixed rate mortgage is that it allows you to know exactly where you stand, regardless of changes in the economy and subsequently the Bank of England base rate.
The base rate, set by the Bank of England, is the rate at which banks lend to each other, and affects the rates at which mortgages are charged.
Fixed rate mortgages often incur a penalty for paying off a mortgage early, and some even charge for people overpaying their mortgage. However, new rules are on their way which will prevent lenders from charging people in this way.
It’s important to know that fixed rate mortgages can also be a disadvantage. A typical mortgage will be around 3% above the Bank of England base rate, but should you fix your mortgage for five years when the base rate is 3% and it then drops to 0.5% like it is currently, you will continue to pay around 6%, while those people in tracker mortgages (ones that track the base rate) will end up paying less.