To fix - The fixed rate mortgage was developed for those mortgage borrowers who prefer to have control of their budgets. With a fixed rate mortgage you know exactly what your mortgage repayments are going to be so there are no nasty surprises lurking around the corner. The fixed rate mortgage eliminates the risk of your monthly mortgage payments being increased beyond your means to meet your payments.
When not to fix - Careful consideration should be given to a fixed rate mortgage if you know or believe you wish to move home or lender within the close foreseeable future. The reason being is that it could cost you many thousands of pounds in a redemption fee. Some reasons for moving could be that you may have a child and require an extra bedroom, you may wish to downsize because your house is becoming too expensive to run.
What it means to you - First and foremost what a fixed rate mortgage gives you is a good night's sleep. By that I mean you can sleep with peace of mind that you can meet the monthly mortgage repayments that you agreed upon from the outset of the fixed rate mortgage contract term.
The main consideration - Unfortunately a fixed rate mortgage usually comes with a redemption penalty meaning you pay a financial penalty to the mortgage lender if you redeem the mortgage during the agreed fixed rate mortgage term. As this usually equates to around six months mortgage payments it is something not to be taken lightly.
Risk Vs no risk - Apart from the redemption fee you need to ask yourself whether or not you wish to live in fear once a month when the Bank of England meet to discuss whether or not to lower, higher or leave the mortgages rate at its current rate. It is a calculated risk you take if the mortgages rate is increased and puts pressure on you to find additional money to make higher mortgage payments.
Weigh up your options - You need to ask yourself a load of questions and look at various options when considering a fixed rate mortgage. The fixed rate mortgage is not only about whether or not you are risk averse as you also have to consider the total amount the mortgage deal is going to cost you long term.
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