SimplyFinance - Fixed Rate Remortgage

Fixed Rate Mortgages now seen as a safer option than a Tracker

2010-01-21T00:00:00Z

As many as 4,800 people could choose to remortgage each day over the next six months, according to research by retail and commercial bank Santander. Due to expected increases in the Bank of England base rate over the coming months, many homeowners could opt to make the most of fixed rate deals rather than taking a risk on a tracker mortgage.

The research comes from Santander's Mortgage Remo Index, which monitors monthly remortgaging trends. They have found that as many as 880,000 people in the UK could be coming to the end of their mortgage deals over the next six months and will need to make the decision about who will manage their home loan from then onwards.

Phil Cliff, Director of Mortgage Marketing at Santander UK commented: "A significant number of people could remortgage in the next six months and among those considering their next deal there is a potential for a fall in demand for tracker deals.

"Borrowers have seen a large number of highly competitive fixed deals come on to the market recently and with many commentators predicting a base rate rise this year, homeowners now seem more inclined to play it safe with a fixed rate deal."

According to the research, over half (51%) of homeowners who will be remortgaging in the next six months say the factor that will most influence their decision on which deal to take is the opportunity to take advantage of a good rate. This is followed by the opportunity to make under or overpayments (9%) and speculation that the Bank of England's base rate will go up (6%).

If you are planning to remortgage and would like to talk through your options with an authorised mortgage adviser, please fill out our short remortgage form. We will then connect you with an adviser who can give you a free, no-obligation quote based on your financial circumstances.

Fixed Rate Mortgage Basics

2007-12-13T00:00:00Z

If you're looking to lower your monthly mortgage payment or to find a fixed rate mortgage, we can help. Even in the current financial climate, the UK's mortgage lenders still help many people find fixed rate mortgages with which to buy their homes.

What is a fixed rate mortgage?

In a fixed rate mortgage, interest rates are fixed for a set period of time. When you sit down to negotiate the terms of your fixed rate mortgage with your lender, you will decide with them for how long your interest rate will be fixed. Most fixed rate mortgages have fixed rate periods of 3-10 years, but the 15 year fixed rate mortgage is gaining in popularity and in some cases, lenders offer lifetime fixed rate mortgages.

How will a fixed interest rate will help lower monthly payments?

A fixed rate mortgage will help you plan for the future. When the Bank of England's Base Rate or the standard variable rate fluctuates, the interest rate on your fixed rate mortgage will remain static. This stability allows you to plan ahead with your finances and to create dependable budgets.

What are the benefits of a fixed rate mortgage?

A fixed rate mortgage may be the best choice for a first time buyer because he or she will have stability and a static monthly payment on their fixed rate mortgage. As mentioned above, fixed rate mortgages come in 3-10 year fixed rate periods, and occasionally they come with lifetime fixed rates. After the fixed rate period is over, rates will return to normal, but you will have benefited from the fixed interest rates earlier in the term of your loan. After rates return to normal, you may want to consider a remortgage in order to find another fixed rate mortgage. In the UK, interest rates on fixed rate mortgages depend on the fixed rate mortgage products available at the time. You may benefit from services like this which help you find the best rate for your fixed rate mortgage. Mortgage finder services, such as this one, will match you with top lenders, and it will help you get the quote you need for your fixed rate mortgage.

Fixed Rate Mortgages

2007-07-25T23:00:00Z

What is a fixed rate mortgage?

Dreams of owning your own home may be unfulfilled if you can’t afford payments due to the ever rising interest rates. If this is the case, a fixed rate mortgage may beneficial because the interest rate will not change during the term of the loan.

When you apply for a fixed rate mortgage, you can calculate future monthly payments with certainty because the interest rate is fixed, and your payments will not vary. However, if interest rates fall, you are stuck with the interest rate you agreed upon at the beginning of your mortgage term.

Why do I want a fixed rate mortgage?

When you want to calculate what your monthly expenses are going to be so that you can plan for the future, a fixed rate mortgage, as the name suggests, stays fixed. This allows you to be certain that your payments will not increase or decrease during the term of your loan. Fixed rate mortgage period is very short between, commonly between two to five years.

With a fixed rate mortgage, you calculate the term in which you will pay off all the principal and interest, and you will arrive at a monthly payment. Your monthly payment remains constant throughout the entire term of the fixed rate mortgage.

For first time buyers, fixed rate mortgages may be a good option since with variable rate mortgages your payments will fluctuate according to the Bank of England Base Interest Rate. However, with a fixed rate mortgage you know exactly what amount you will need to pay each month, regardless of changes in interest rates.

What are the disadvantages of a fixed rate mortgage?

With a fixed rate mortgage, even when interest rates decrease, you will have to pay the same amount of interest you agreed on at the commencement of your loan term, even if it is higher than the current interest rate. If this becomes a problem, it may help to speak with a mortgage lender or counselor who may be able to help you figure out a better payment option.

When you opt for a fixed rate mortgage you will be charged a penalty (called a redemption penalty) if you wish to change the terms of your mortgage or pay it off completely or in part before an agreed upon date. Often, these redemption penalties are fixed at a level that would make it uneconomical to change the mortgage or transfer to another lender before the agreed upon date.

If you'd like help finding the best fixed rate mortgage loan for you, take a minute to fill out out short questionnaire, and a SimplyFinance representative will contact you shortly to introduce you to a mortgage broker. Your broker will work and search to find the best fixed rate mortgage deal for you.

Why Now is a Good Time to Consider a Fixed Rate Mortgage

2008-02-07T00:00:00Z

There are several different types of mortgages available to potential homeowners, but it is the fixed rate mortgage that has potential mortgagers interested as of late. A fixed rate mortgage uses a set interest rate (a certain percentage above the BoE base rate) for a predetermined period of time. Due to the increased security offered by a long-term fixed deal, some fixed rate mortgage providers, have begun to offer products from a 15 year fixed rate mortgage upwards.

After the fixed rate term ends, you will pay a variable interest rate for the remainder of the mortgage term. A variable rate mortgage tracks the base rate up and down as the BoE alters it, which can be good or bad for the home owner depending on their personal financial situation and on where the base rate is at that particular time. With this said, the biggest advantage of a fixed rate mortgage is that you know exactly how much your monthly payment will be, and this allows for better and more thorough financial planning.

As the United States is in the midst of a financial downturn, the UK is watching. Because of the increasingly difficult financial environment, the Bank of England has lowered the base rate in order to free up more capital for consumers. In fact, according to FT.com, mortgage approvals in December in the UK fell to the lowest level since 1999, putting pressure on the Bank of England to lower interest rates in order to keep the mortgage market on its feet. After the rate cut, Dunfermline offered a two-year fixed rate mortgage at a low 5.29%, which sold out in only four days.

Many people have been wary of fixed rate mortgages in the past because of some of the fees involved. With a fixed rate mortgage, the initial fees are often higher, but you need to keep in mind that you are paying for peace of mind. According to FT.com, a new poll by Nationwide shows that consumer confidence is at a low and that people are looking for stability. Due to this, many consumers are willing to look past the initial fees associated with fixed rate mortgages.

In addition, if you want to repay your mortgage before the scheduled end date of your loan, there are often early repayment fees associated with fixed rate mortgages. However, this is changing. Many lenders are increasing the amount of over payments allowed annually on fixed rate mortgages, which makes the repayment plans more flexible. To aid in lowering costs for consumers, this past October the chancellor proposed to help lenders by working on measures that would lower the number and the amount of fees on fixed rate mortgages.

With this said, now is a great time to consider a fixed rate mortgage because rates are at a low level, and they may be getting lower in the near future as another BoE rate cut has been predicted by industry analysts. Whether you're in the market for your first mortgage or you're looking to remortgage at a lower rate than what you're currently paying, now is a great time to consider a fixed rate mortgage.

If you're interested in finding out more about a fixed rate mortgage, take a moment to fill out a short mortgage form, and SimplyFinance will connect you with an experienced adviser from the SimplyFinance network who will provide you with information and a great rate on a fixed rate mortgage.