Fixed-Rate Mortgages | Mortgage Advice in Hull
Fixed-rate Mortgage Advice in Hull
What is a fixed-rate mortgage?
Sometimes people need to know exactly how much their mortgage payments will be. If this is the case, then you should get a fixed-rate mortgage in Hull. A fixed-rate mortgage is where you get a set mortgage payment every month which you will need to stick to for a set period. This period can be anywhere from a year to ten. The longer you fix for, the higher the rate becomes.
Which is the cheapest fixed-rate mortgage?
If you are looking for a cheap fixed-rate mortgage, then you shouldn’t consider a rate longer than two years. You will get the best rate available to you, however, you will only be on that rate for 2 years. Believe us when we say it, the end of the two years come around quickly. This means that you will have to search for even more deals towards the end of the mortgage. If the interest rates go up during the 2 years, then you may be faced with higher payments at renewal.
Should I fix my mortgage for 5 years?
If you don’t like the idea of searching for new deals every two years, perhaps a 5-year rate would suit you better. You would have a stable recurring payment for a much longer period. Remember, being on a
fixed-rate mortgage for 5 years will mean that you will be paying more for each mortgage payment per month than you would on a 2-year rate.
Should I take out a long term fixed-rate mortgage?
When we say “Long-term”, we mean 7 or 10 years. There are both positives and negatives for long term fixed-rate mortgages. Long term fixed-rate mortgages have never been very popular in the UK. As a Broker giving out Mortgage Advice in Hull, we don’t usually recommend long term fixed-rate mortgages. We know that a lot can change within a decade so committing to a fixed payment for as long as ten years may not work in your favour. Once you are in the deal, you cannot get out of it.
Early Repayment Charge (ERC)
If something happens and your financial situation changes you could end up having to repay your mortgage a lot earlier than you planned. This is known as an Early Repayment Charge (ERC). The ERC is calculated as a percentage of the amount that you owe. For example, if you manage to pay off your £100,000 mortgage early and your ERC is 2%, you would be charged £2,000 penalty as you broke the fixed contract.
We often see that people get an ERC because they think that they can get away with paying off their fixed rate early and they don’t realise that they will be charged. For example, people who know that their fixed rate is due to end soon tend to look up deals for their next fixed-rate mortgage. If they find a great deal and they think that the rate may increase, then they may pay off the rest of their fixed-rate payments to get this deal even though they shouldn’t.
We also advise that you avoid chasing “headline” deals. Remember that the lowest rates come with the highest setup fees which some customers are keen to avoid. Get in touch today for more fixed-rate Mortgage Advice in Hull if you are still confused or need more help. This particularly applies to First-Time Buyers and people Moving House in Hull.