Fixed-Rate Mortgages | Mortgage Advice in Manchester
Fixed-Rate Mortgage Advice in Manchester
What is a fixed-rate mortgage
The general rule is that the longer you fix your mortgage for, the higher the interest rate is. Therefore, if you are looking for the lowest rate possible, then you should look for short term fixed rates. The downside to a short-fixed term is that your mortgage will be up for renewal quicker. And when you come to remortgage your payments might increase.
Medium & Long Term Fixed Mortgages
If you don’t like the idea of searching for new fixed-rate deals every two years then a medium-term fixed rate could be the right option for you.
Five-year fixed rates are popular as they add the security constant monthly payments for the foreseeable future. However, if interest rates drop whilst you’re locked in, you will be paying more than you might have been had you opted for a shorter period.
There are a limited number of 7- and 10-year fixed rates on the market. These have always been the least popular choice for customers. People tend to feel a decade is too long to be fixed in for. These are also the most expensive fixed mortgage products available.
In addition to the rates, you also need to take into consideration the booking and arrangement fees. A booking fee is payable upfront and an arrangement fee is payable on completion. You might know people who have added fees to their mortgages, but this increases the total amount repayable.
Sometimes your financial situation can change unpredictably and you might have to repay your mortgage a lot earlier than you initially planned. This is called an ERC or an Early Repayment Charge. The ERC is calculated as a percentage of the amount that you still owe. So if you manange to pay off your £200,000 mortgage early and yoru ERC percentage is 2%, you would have to pay back £4,0000 as you broke the fixed contract.
People think that they can pay off there fixed mortgage early not knowing about the ERC. You are tied into that deal and you can’t jump out of it and pay it off early unless you are okay with a charge. People who know about the charge may pay their mortgage off early to get a better deal taht is currently on the market that may not be available in a couple of months.
We advise that you avoid chasing “headline” deals. You need to remember that the lowest rates come with the highest setup fees. Contact us today for more fixed-rate Mortgage Advice in Manchester if you are still uncertain on them and need more help.