What is a fixed rate mortgage?

2010-02-10T14:55:00.004Z

A fixed rate mortgage means the interest rate you are being charged is fixed, usually for a specified amount of time or until a specified date.

For example, you may have a mortgage that is fixed at 4.99% until 31/12/2012. This means that regardless of the Bank of England base rate or the lender's standard variable rate (SVR), the interest rate will remain at 4.99% until 31/12/2012.

Advantages
* You can budget for your mortgage as you know exactly how much the mortgage will cost each month until the end of the fixed rate.
* You are protected against any rises in interest rate.

Disadvantages
* If the lender's SVR falls below your fixed rate you will not be able to take advantage of the saving from having a lower interest rate.

Something to remember: most, if not all, fixed rate mortgages have an early repayment charge (ERC). This is a fee, usually a percentage of the loan amount, that is charged if you redeem your mortgage before the end of the fixed rate.

If you a certain that you will not want to change your mortgage in the short term future (2-5 years), and want protection against interest rate rises and like to know exactly what your mortgage payments will be each month, a fixed rate mortgage could be just for you!

If you would like to discuss fixed rate and other types of mortgages with an independent mortgage advisor, I recommend Universal Independent Mortgage Services. Click here to visit their website for further details.

Mortgage advisor or no mortgage advisor?

2010-02-10T14:36:00.002Z

Off the top of my head there are 3 ways you can find the right mortgage.

1. Physically visit every mortgage lending company you know providing each of them with your personal and financial details and see which one will give you the best deal.

2. Apply for a mortgage with your own bank without knowing whether or not they are giving you the best deal.

3. Use an independent mortgage advisor who is qualified and experienced to search the marketplace for you, recommend the most competitive product, arrange the mortgage all the way through to completion.

Now, to me, number 3 is the best option. Yes, it is likely you will have to pay a fee, but isn't it worth knowing you've got the best possible deal?

Imagine for example, you went to the lenders in your local high street. Firstly, you are likely to have to make an appointment with each one. Considering it is probably Barclay's, Halifax, HSBC, Lloyds (C&G), Nationwide and NatWest, you're talking about 6 different appointments as opposed to seeing one independent mortgage advisor.

Please note there is an emphasis on independent mortgage advisor. A mortgage advisor from one bank/building society is unlikely to advise you on anything other than his bank's own products.

You can easily find an independent mortgage advisor via the FSA website, yell.com, bt.com or the phone books.

If you want me to recommend you one, I would recommend Universal Independent Mortgage Services. Click here to visit their website for further details.

So there's a start. Coming soon I'll be explaining the different types of mortgage such as fixed, tracker, capped and standard variable rate.

Which mortgage?

What is a fixed rate mortgage?

Mortgage advisor or no mortgage advisor?