Fixed Rate Mortgage, What are the benefits to you?
A fixed rate mortgage does exactly what is says on the tin. The interest rate you agree on at the time you set up the mortgage is fixed for an agreed period. The agreed interest rate will not go up (or down) during the fixed rate term.
Of the thousands of different mortgage products available the fixed rate mortgage could be the one for you so let’s establish a few facts before you make any decisions.
The main reason of the fixed rate mortgage is to provide security with stable mortgage payments but we need to look at some conditions to help you make a decision if a fixed is for you.
There are many reasons to consider taking out a fixed rate mortgage and the risk of increased interest rates in the future is one of many.
Providing you know and fully understand the facts if you have a good reason to choose a fixed rate mortgage the decision is made easier. Here is one very good reason.
Most household “outgoings” are variables as they can differ each month so it is difficult to budget. So one of the good things about the fixed rate mortgage is that you know what your payment is every month for the duration of the fixed rate term.
As your mortgage payment is in many cases the biggest household outgoing isn’t it a comforting thought that you know what you need to pay each month?
Many mortgage experts refer to a fixed rate mortgage as “peace of mind”. So many people have lost their homes due to a hike in mortgage interest rates.
When given an option whether to gamble with your mortgage payments take the best option for you.
In the past many people took a gamble that interest rates would not go up beyond their means. For some that gamble cost them their home.
Home repossessions are once again on the increase and you can take measures to avoid becoming one of the victims. Rather lose out if interest rates go down than lose your home if they go up.
Imagine trying to explain to your family that you can’t afford to pay your mortgage when your income is still the same. Your income may be a constant but interest rates can and often do go up.
Decisions, decisions! One decision you should think carefully on is whether or not a fixed rate mortgage is for you. Remember the major benefit is constant mortgage payments for the fixed term.