A fixed rate mortgage may seem simple at first, but this quick guide will ensure that youbre clued in on how this type of mortgage works, and how you can benefit from it.
Fixed rate mortgages ensure that you have a means of guaranteeing your mortgage payments over a set period of time. Fixed rate mortgages, in particular, only last for their initial, contracted period, which is typically from 1 year to 10 years. After this time, your mortgage switches over to a variable rate, which wonbt give you the same kind of guarantee as the fixed rate does.
During the fixed rate period of your mortgage, your payments will remain the same, regardless of any changes in interest rates. Youbll be protected if the rates of your mortgage go up, and you wonbt be expected to pay any more than you already do. Fixed rate mortgages also usually have an early repayment charge, so itbs best to keep that in mind if youbre thinking about repaying your mortgage before your fixed rate period ends. However, most fixed rate mortgages will allow you to make overpayments, though this amount usually only stretches to 10% of the balance still owed.
With a fixed rate mortgage, youbll know exactly how much your monthly repayments will be for the duration of your mortgage period. Because of this, a fixed rate mortgage allows you to budget around the monthly payments you make for you mortgage, without any unexpected or larger payments towards what you owe.
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