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.
One of the many reasons there are so many different mortgage deals is that each borrower has individual needs. The fixed rate mortgage falls into a category but is it for you?
The main purpose of the fixed rate mortgage is to offer stability with mortgage payments. Because a mortgage should be tailored to an individual’s needs only the borrower can say whether or not it is good or bad.
There are many factors to consider when taking out a mortgage and risk of rising interest rates in the future should definitely be on your list of considerations.
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.
Budget control is one very good reason to make life easier for you. The fixed rate mortgage gives you that control for the term that you choose.
For most people their mortgage payment is their biggest single outgoing of the month. Wouldn’t it be nice to know that the payment will remain the same for a term of your choice?
What price is peace of mind worth? When interest rates go up it will not affect your monthly payments during the fixed term with a fixed rate mortgage.
Go to a casino or to Las Vegas if you want to gamble but don’t gamble with your mortgage payments.
Many of the people who lose their homes gamble that the mortgage interest rate will go down and so will their monthly mortgage payment.
If interest rates go down you could lose out on a reduction in your monthly mortgage payments (providing your lender passes on the interest rate cut). If it goes up you could have your home repossessed.
Which is worst? Losing out on possible lower monthly mortgage payments if interest rates are reduced or losing your home if the interest rates are increased.
Few decisions are easy in the mortgage process but taking out a fixed rate mortgage is a decision you should not take lightly. Don’t gamble as a fixed rate mortgage could be the repayment method for you.
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