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[F382]Fixed Rate Mortgage Deals

by Francis Ghiloni, Fra

Fixed rate mortgages are mortgages where the monthly payments stay the same for the period of the mortgage deal. Many borrowers like this type of mortgage because it gives them certainty over their monthly paymentsfor the period of the deal. Others are attracted by these at times when they are concerned that interest rates might rise over the coming months. Whilst they have the clear benefit of certainty of payment it is possible that borrowers can fail to realise the potential impact on their finances when their fixed rate deal ends.

It is estimated that more than 1.3 million fixed rate mortgages will come to an end in 2007. Many of these were taken out in 2004 and 2005 when mortgage rates were significantly lower than they are today. We are already starting to see huge numbers of people struggling with their mortgage payments. Recent research from mform.co.uk has shown that up to 8 million people are now struggling with their mortgage payments. It is likely that those that have come to the end of their fixed rate mortgages are feeling the pinch most. The increase on the monthly payments on an average mortgage on a typical standard variable rate today compared to a cheap two year fixed rate mortgage taken out in 2005 could be as much as 60%. This would clearly have an effect on anyone’s finances if it has not been budgeted for.

So what can you do? Well the fact is that 2 and three year fixed rate mortgages are not as cheap as they were in 2005. Therefore the most you can do is look to minimise the increase in cost that you will have. This is best done by looking at the whole of market – a mortgage comparison site that compares all lenders is needed for this. But don’t just look at the headline rate – look at the true cost of the mortgage over the period of the deal that you want. The cheapest true cost might not have the cheapest headline rate!

And once you have your new mortgage deal, still keep an eye on interest rates from time to time before it expires so that you know the impact it would have on your finances if you had to take a new mortgage out.

Fixed rate mortgage deals are getting an awful lot of publicity at the moment because they seem to be attracting the attention of consumers that are indeed trying to get the best possible deal on their new home. After all, the amount that you pay for a house is enough without all of the relevant interest that is to be added on as well. As a direct result of this, individuals are looking for the best possible deals that can ultimately save them money, and fixed rate mortgage deals seem to provide the best options at the moment!

Fixed rate mortgage deals are perceived as the best options as a result of recent activity in the global economic market, which has seen interest rates around the world go up owing to persistent instability. Whilst this may help savers, it has not helped borrowers at all. With the Bank of England interest rates standing at 5.75%, the highest level since March 2001, mortgage payments have gone up a lot and many households are currently struggling to keep up.

It is viable that some homeowners have had their mortgage payments hiked up an amazing and unbelievable five time since August 2006 in line with interest rates. However if those homeowners that were affected had chosen fixed rate mortgage deals instead of variable mortgage deals then their payments would have remained static until their current deal had come up for renewal. This may have saved them thousands in the long run, especially if their mortgage was taken over the maximum of twenty five years.

Fixed rate mortgage deals have been available from most big mortgage providers for some years now, but many homeowners were unwilling to take the risk of buying into them just in case the interest rates dropped as their home would end up costing far more in the long run. Hindsight is a wonderful thing but it may have actually saved them money!

Fixed rate mortgage deals often have an interest rate that is slightly above the current variable rate because banks and lenders have no way of knowing what will happen to the interest rates over the course of the deal term. However, many providers are now bringing them in line to encourage individuals to consider them and thus to attract new custom at the same time given the current financial climate.

Indeed, many are attracted by the fact that they can opt into a deal that is only one or two years long and so they are protecting their interests without committing to something more long term. However, there are just as many investigating the possibility of fixed rate mortgage deals that are much longer, such as those lasting for five or ten years, or even those that actually last for the duration of the mortgage, that is to say twenty five years. This is a relatively new concept but it seems that people are unwilling to take any risks with their finances at the moment. Paying the same amount every month for the duration of their mortgage seems extremely attractive, and it is no wonder given the economically uncertain times that we live in now!

Article Source : Get A Second Mortgage

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Both Francis Ghiloni & Jason Hulott1 are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Francis Ghiloni has sinced written about articles on various topics from Mortgage, Iphone Reviews and Finances. Francis Ghiloni is the Marketing Director of mform.co.uk. mform.co.uk lets you from every lender in the UK.. Francis Ghiloni's top article generates over 5400 views. to your Favourites.

Jason Hulott1 has sinced written about articles on various topics from Used Car, Lose Weight and Online Dating. Jason Hulott is Business Development Director at service, PolarMortgages. Visit Polar Mortgages now for more information about UK mortgages and remortgages. Jason Hulott1's top article generates over 301000 views. to your Favourites.