Fixed Rate Mortgage, Who Is It For?

A fixed rate mortgage does exactly what is says on the tin. The interest rate you agree on at the time you set up the mortgage is fixed for an agreed period. The agreed interest rate will not go up (or down) during the fixed rate term.

One of the many reasons there are so many different mortgage deals is that each borrower has individual needs. The fixed rate mortgage falls into a category but is it for you?

The main purpose of the fixed rate mortgage is to offer stability with mortgage payments. Because a mortgage should be tailored to an individual’s needs only the borrower can say whether or not it is good or bad.

One of many reasons borrowers choose a fixed rate mortgage is to protect themselves against a hike in future interest rates.

Let’s tell you one of the real good things about a fixed rate mortgage and you can then see if you think a fixed rate is good or bad.

It’s a fact that crystal balls don’t work so I figure the next best thing is to know what your mortgage payments are going to be every month. That is where the fixed rate mortgage comes into its own.

As your mortgage payment is in many cases the biggest household outgoing isn’t it a comforting thought that you know what you need to pay each month?

So many people have had their home repossessed due to mortgage interest rates being increased. However, a fixed rate mortgage can give you peace of mind against such increases.

Go to a casino or to Las Vegas if you want to gamble but don’t gamble with your mortgage payments.

Many of the people who lose their homes gamble that the mortgage interest rate will go down and so will their monthly mortgage payment.

If interest rates go down you could lose out on a reduction in your monthly mortgage payments (providing your lender passes on the interest rate cut). If it goes up you could have your home repossessed.

You could ask yourself, “Would I be more rattled if I paid too much for my mortgage with an interest rate drop or if I lost my home because I couldn’t afford the higher mortgage payments?”

Decisions, decisions! One decision you should think carefully on is whether or not a fixed rate mortgage is for you. Remember the major benefit is constant mortgage payments for the fixed term.