By Chris Ringham 24 Jul, 2019 0 Comments

Fixed Rate VS. Variable Interest Rate Mortgages

Fixed Rate VS. Variable Interest Rate Mortgages

When you're browsing different types of mortgages, you've doubtless come up against many different kinds. The answer to the question "what are the different types of mortgages available?" is a broad one, but generally speaking, the different types of mortgage loans available will boil down to fixed rate or variable interest rate.

Buying your first home? Download our First Time Buyers Guide today!

What's The Difference?

So, when it comes to a fixed rate vs variable rate mortgage, what's the difference between the two? As you might have guessed, a fixed rate mortgage sets out the repayments at the outset of the loan. Those repayments will not change and nor will the interest rate, for a specified period of time - often five years, for example.

A variable interest rate mortgage is one where the interest rate, and your mortgage payments, in turn, can go up or down. They're normally split into two kinds - standard and tracker. Standard means the interest rate is determined by the lender, and tracker follows a complete separate interest rate, such as the Bank of England's.

What Are The Pros And Cons?

When choosing fixed vs variable interest rate mortgage plans, it's essential to know the pros and cons of each.

Pros

The pros of a fixed rate mortgage are that you always know in advance what your mortgage payments are going to be - which is useful if you're in the position of only just being able to afford your payments. You're also somewhat protected from fluctuating interest rates.

A variable interest rate mortgage's pros are that you can stand to have lower monthly repayments in situations where the interest rate drops. It's also possible that because you're taking a degree of risk of higher interest rates, a lender could offer more favourable initial rates as a reward.

Cons

The main con of a fixed rate mortgage is that you're never going to get the benefit of a lower monthly mortgage repayment. You may be protected from interest rates rising, but if interest rates happen to drop then your repayment amount is going to stay the same regardless.

One con to consider of a variable interest rate mortgage is that you're never going to be entirely sure what your next month's mortgage payment is going to be. If interest rates go down, it'll be lower - but if interest rates go up then it will be higher than you're used to.

Image Source: Pixabay

First Time Buyer's Guide

What Happens Once Probate Is Granted?

By Chris Ringham 25 Mar, 2020 0 Comments

If a person has died without leaving a will, it is usually up to the next of kin to apply for a 'grant of letters of administration', otherwise...

Continue reading

The Key Differences Between Freehold & Leasehold Property (Explanation For First Time Buyers!)

By Chris Ringham 12 Mar, 2020 0 Comments

There is no doubt that purchasing your first home is both exciting and a little daunting. As a first-time buyer, you will not have been through...

Continue reading

5 Common Divorce Myths Dispelled

By Chris Ringham 02 Mar, 2020 0 Comments

There are many myths surrounding divorce but can you believe everything you read? In this helpful article, we debunk five of the most commonly...

Continue reading

How Long Does Probate Take If There Is A Will?

By Chris Ringham 14 Feb, 2020 0 Comments

The term 'probate' refers to the legal process of reviewing a will. This process is aimed at determining the authenticity and validity of a will....

Continue reading

What Are The Steps Of A Property Transaction?

By Chris Ringham 06 Feb, 2020 0 Comments

Stepping onto the property ladder is an exciting time, but the process of purchasing your first home can be confusing.

Continue reading

We Provide Will & Probate Services In March & Wisbech

By Chris Ringham 29 Jan, 2020 0 Comments

If you require Probate services in the March or Wisbech areas, Bowsers Solicitors is on-hand to help you understand the process, including...

Continue reading

Subscribe Here!

the-conveyancing-process-explained-guide

Recent Posts

New call-to-action