The pros and cons of fixed-rate mortgages
Getting a mortgage in Shropshire is a big step because it is something you are going to be tied to for some time – which is why it is so important to get it right.
Juggling domestic finances is extremely difficult at the moment and we really don’t know what the next few years will bring so with a mortgage being a major budget commitment, it is vital to do your due diligence and seek professional guidance.
Mortgage service you can trust in Shropshire
Dwello Mortgages has become the go-to source for mortgage advice in Shropshire and we are particularly well placed to meet all your mortgage needs – including the perennial thorny subject of mortgage rates.
Setting up a new mortgage requires you to:
- Consider your financial circumstances
- Set your long-term goals
- Assess market conditions and trends
- Understand the commitment and affordability
What is a fixed-rate mortgage?
Most people in Shropshire go for a fixed-rate mortgage which is usually set over a period of two to five years – although this can vary, and means the interest you pay will remain unaltered over the term of your mortgage. At the end of that time it will be necessary to remortgage, otherwise you will be moved to your lender’s Standard Variable Rate, which is usually much more expensive.
So what are the pros and cons of taking out a fixed-rate mortgage?
Pros
- Predictable payments – having a fixed rate means your payments will not change, making it easier to budget and regulate your finances.
- An easier option – fixed-rate mortgages are more straightforward, making offers easier to understand and compare.
- No nasty surprises – If interest rates rise, which has been the case recently, being on a fixed rate means you won’t face those associated increases in your payments, which can be substantial in the present economic climate.
- Peace of mind – a knock-on effect from the above is the reassurance and peace of mind that a fixed-rate mortgage brings, allowing you to better manage your finances.
Cons
- Higher initial rates – if interest rates are high when you take out your fixed-rate mortgage you will be locked into that rate for the duration of the arrangement, even if the interest rate falls during that time.
- Lengthy commitment – signing up to a long-term fixed-rate mortgage may not be compatible with your financial circumstances or aspirations.
- Limited options – it can be hard to alter or renegotiate your fixed-rate mortgage without refinancing, meaning it may not be the ideal option for people who think they may face significant financial changes over the duration of the loan.
- Missed savings – interest rates may decline substantially after taking out your fixed-rate mortgage, meaning you would miss out on any potential savings during the term of your agreement.
Dwello Mortgages is hosting free mortgage advice surgeries at venues across Shropshire to help people understand the current market.
Call us or email us to find out how we can help you with your first or next mortgage move.
