New Buyers More Likely to Choose Fixed Mortgages
When you start out looking for a new home or a mortgage, one of the first things you need to decide is what sort of mortgage will suit you best.
There are two main types – fixed rate and variable rate. Fixed rate means that your payments stay the same throughout the term of the agreement, while variable rate means they will fall and rise according to fluctuations in the interest rate.
Fixed rate agreements mean that each month’s payment is predictable and sudden rises in the interest rate won’t affect you. Unfortunately, sudden falls won’t benefit you either.
Variable rate agreements mean that you’ll be happy when the interest rates fall, but not so happy if they rise, as your mortgage payments will follow suit.
Variable rate mortgages come in different flavours, though – standard variable rate, capped rate, tracker, discount and offset being the best known. These arrangements can help to shield you from the worst of any interest rises, but you’ll still feel them.
Set in their ways
In recent years, Brits are more likely to choose a fixed rate mortgage. HSBC discovered, in a survey of 1,500 British borrowers, that 72% would consider fixing for ten years in a bid to find some certainty.
The Millennials, the people who reached adulthood in or around 2000, are the biggest fixed rate fans. Londoners are also likely to want to fix, followed by people in the North East, Yorkshire and Humberside.
A ten-year fixed mortgage is attractive because homeowners will know how much they need to pay each month for the next ten years, which makes budgeting easier and predictable. This reduces stress and lets you focus on other financial matters.
Is fixed rate right for you?
Of course just because lots of other borrowers are looking at fixed rate deals, this doesn’t mean it’s right for you. You should always talk to a mortgage advisor before you make a decision to make sure you have all the facts before you decide.« Back to Latest News