An explanation of fixed rate mortgages for first time buyers
Buying your first property can be a fairly daunting experience as there are many different types of mortgage available. There are a number of products that are suitable for first time buyers, with fixed rate mortgages being one of these. As with all mortgages, you will find that you have better interest rates available to you the bigger your deposit is.
What is a fixed rate mortgage?
A fixed rate mortgage is one that provides you with a fixed interest rate for a specific period of time. These time periods can last for between two and five years, during which the interest rate on your mortgage will remain the same no matter what the overall interest rate does during that time.
View 2 year fixed rate mortgages
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View 5 year fixed rate mortgages
View 10 year fixed rate mortgages
Why choose a fixed rate mortgage?
In the current economic climate with record low interest rates, and with the probability of them rising over the next couple of years, a fixed rate mortgage can provide you with assured low payments that will not be affected by any rises in interest rates until the end of your fixed rate period. Currently interest rates cannot go any lower and so this is the perfect time to make the most of fixed term deals. Even if you are looking to buy in a couple of years when the interest rates have risen slightly, it would still be a good time to look at fixed rate deals as they will still protect you from any subsequent interest rate rises.
Other things you need to know about fixed rate mortgages
When you start looking at fixed rate mortgages you will find that there are different lengths of fixed rate mortgage available. While in some cases it may be the most beneficial option to go for a five year tie-in period, you will need to consider if you are going to be in a stable situation for the next five years. If you move and are not able to take your mortgage with you before the tie-in period is up you will find that there are significant redemption charges and should you find yourself in a position to pay off the whole mortgage there will be an early repayment fee of up to 5% of the total loan. However most people will not be in a situation to do this and the security of knowing that your mortgage payments will not change will usually outweigh these early redemption penalties.
Whether interest rates go up or not, it is always a good idea to get some independent financial advice if you are a first time buyer so that you don’t have any surprises when it comes to making your mortgage application.
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