When taking out a mortgage, one of the questions that you will be
confronted with is whether you should take out a fixed rate loan or a
variable rate one. Both types of loans have their pros and cons and
your choice will usually be influenced by the current state of your
finances, how comfortable you are with changing interest rates and also
your credit rating. Fixed rate loans are good for certain kinds of
people:
• Those who want to deal with consistent monthly payments.
• Those who want to pay the loan over a long duration.
• Those who like predictability – they want to set a budget and stick to it over the coming years.
• Those who can get low interest rates and want to have them for the duration of the loan.
• Those who expect that interest rates will increase.
That said, there are huge disadvantages to taking this kind of deal
sometimes. One of them is that in the current environment where interest
rates bob up and down all the time, you may end up paying a lot more
because interest rates may be low for quite a while.
Variable loans, on the other hand, are loans that allow interest rates
to change as dictated by market conditions. This means that when
interest rates are low you pay less and when they are high you pay more.
They are good for 2 kinds of people:
• Those who don’t plan to hold the loan for a long time.
• Those who predict that interest rates will drop.
The only disadvantage to variable loans is that should high interest
rates prevail, you will end up paying more even if you hold the loan for
only a few years.
You must weigh your situation carefully before you decide which kind of
loan is best for you. If you are getting into the market when interest
rates are very low, you may just want to lock them with a fixed rate
loan. If, however, you are expecting a windfall and you see yourself
paying the loan off in a few years then the best thing to do is to get a
variable rate loan and let the markets decide for you.
You can get advice on matters like these from professionals such as
Mortgage Advice Services. They are experts in helping people get the
best mortgages for their circumstances. You can contact them on 01332
257 087 or visit their website,
http://www.mortgageadviceservices.co.uk/Labels: benefits of re-mortgaging, contents insurance, fixed rate mortgages, independent mortgage advisers, insurance advisor nottinghamshire, life insurance, mortgage advice nottingham
