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Fixed Rate Mortgage
If you are looking for a simple, uncomplicated mortgage
where you exactly where you stand in terms of the costs, then a fixed
rate mortgage may well be what you are after.
With a fixed rate mortgage the interest that you will be paying, and therefore
the monthly repayments, remain at a set amount for the duration of the
agreement – meaning that no matter what happens to the Bank of England
base rate you will always pay the same amount.
The amount of time that the rate is fixed for is entirely up to you, if
the base rate is low when you take out the mortgage then you may wish
to fix the rate for a long time, or even for the entire life of the mortgage.
The risk in fixing the rate for a long period is that if the base rate
does fall you will be stuck with a higher rate to pay, on the other hand
if the base rate rises then you will not be affected and so will not see
any rise in the cost of your mortgage.
Deciding on the duration to fix the rate for can be difficult, and you
will need to make your decision based on how you think the base rate will
change in the future, and how much risk you are willing to take. Seeking
advice from a professional such as a mortgage broker may help you to weigh
up your options and settle on a term that is best for you.
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