The general rule of thumb in the mortgage world, is that the longer you fix your mortgage for, the higher the interest rate is going to be. Therefore, if you are looking for the lowest rate possible, you should really look for a short term fixed rates mortgage. The downside to a short-fixed term, is that your mortgage will be up for renewal quicker, meaning that when you come to Remortgage in Manchester, your monthly mortgage payments might be a lot more than they were previously.
If you don’t like the idea of searching for new fixed-rate deals every two years, but would rather not reach the point where interest rates go too high, then a medium-term fixed rate could be the best option for you and your circumstances.
Five-year fixed rates are popular choices, as they add the security of constant monthly payments for the foreseeable future. The downside here is that if interest rates drop whilst you’re locked in, you will end up paying more than you might have had to, if you had instead opted for a shorter period.
There are a limited number of 7 to 10-year fixed rates on the property market. These have always been the least popular choice for customers, due to the sheer length of the deal, as people tend to feel a decade is too long to be fixed in for a mortgage. These are also the most expensive fixed mortgage products available to customers.
In addition to the interest rates, you also need to take into consideration the booking and arrangement fees. A booking fee is payable upfront, whereas an arrangement fee is payable on completion. You might know people who have added fees to their mortgage amounts, but this increases the total amount repayable at the end.
Sometimes your financial circumstances suddenly change and you might have to repay your mortgage a lot earlier than you had initially planned for. This is called an ERC or an Early Repayment Charge. The ERC is calculated as a percentage of the amount that is still owed on the mortgage. So if say for example, mortgage amount you have left to pay is £200,000 and you are able to pay that off early, with a percentage that is 2%, you would have to pay back £4,000 to cover the broken fixed contract.
Many homeowners think that they can pay off their fixed mortgage early, without knowing about the Early Repayment Charge. You are tied into that deal and you can’t just jump out of it and pay it off early, unless you are okay with having a repayment charge added onto it. People who know about the charge may still choose to pay their mortgage off early to get a better deal that is currently on the market, especially if it is one that may not be available in a couple of months.
We would recommend that you avoid chasing after “headline” deals. You need to remember that the lowest rates come with the highest setup fees. Please Get in Touch today for more fixed-rate Mortgage Advice in Manchester. If you are still uncertain on them and need more help, our service could be truly beneficial to you.