Fixing mortgages,10 year terms becoming more popular
The recent global credit crunch has caused the price of loans, mortgages and remortgages to go up. Because of this, many people are opting for fixed remortgages and mortgages. 10 year fixed term mortgages can offer you the security of how much you will have to repay each month for years to come.
Most banks and building societies will let you choose how long you want to fix your mortgage or re mortgage for. The minimum is one year for most mortgages, but 10 year fixed rates is a popular choice with borrowers.
Basically, a fixed rate mortgage or remortgage is a loan where the interest rate and monthly repayments will not change during the agreed fixed term. Usually, when the fixed rate term expires the interest rate will revert to the lenders standard variable interest rate.
One of the main advantages of a fixed rate mortgage or remortgage is peace of mind. You can be certain that your monthly repayments will not change so you can more easily organise your finances.
Fixed rate mortgages and remortgages are popular at the moment because the global credit crunch is driving the cost of credit up. While the Bank of England has raised interest rates a number of times over the last year, rates remain historically low for mortgages, so 10 years fixed would seem like a good idea at the moment.
The chief disadvantage with fixed rate mortgages and remortgages is that you will not benefit from cheaper repayments if your lenders rates go down. Also, if you decide to fix your mortgage or re mortgage you will have to pay a higher interest rate than your lenders standard variable interest rate. In general, the longer you fix for, the higher the interest rate will be.
The fixed rate mortgage and remortgage market is very competitive and there are plenty of products to choose from. In the past, fixed rate remortgages offered little flexibility and borrowers faced stiff penalties if they decided to switch lender or make early repayments.
Many of todays fixed rate mortgages and remortgages offer much more flexibility, so shop around for a product that lets you make early repayments and take payment holidays. Many remortgage lenders will leave you pay off up to 10% of your loan each year, even if you are locked into a fixed rate.
Of course, you should try to find the loan that offers the lowest interest rates when you are shopping around for a fixed rate mortgage or remortgage. However, also factor in other costs such as application fees and set up fees that your new lender may charge. Some products will not charge these fees but you will probably have to pay a higher interest rate.
There are many types of mortgages and remortgages on the market today, whether you are looking for fixed rate mortgages or mortgages for bad credit. Whichever you choose, remortgages or mortgages with a 10 year fixed rate seem like a good idea in todays economic climate.
