In the current climate it is difficult to be sure of the best type of mortgage to go for. With the Bank of England base rate falling sharply since October it is difficult to decide which mortgage is best for you. Many who took out fixed rate mortgages last year or the year before in order to protect themselves from rising interest rates are now finding themselves paying considerably more. However as their deals near the end they too can enjoy the reduced rates.
The mortgage market has changed drastically in the last eighteen months. We have gone from not needing a deposit and being able to borrow up to 125% of the value of a home to the norm now of 25 to 40 percent mortgage. This is probably the biggest issue for borrowers at the moment. Many will have to stick with their existing mortgage provider as they can’t put up the deposit requested by other lenders for borrowers. If you are able to put up a large deposit this can make the difference. Very reasonable rates are available for those with god credit scores.
General advice is the best mortgage to go for is a variable rate mortgage. In the past the advice would be to avoid a lenders’ standard variable rate as this was often the highest rate however now as it varies with the Bank of England base rate it is much better than the fixed rate deals on offer.
Many do prefer the security that comes with a fixed rate mortgage. They know exactly what their monthly repayment will be each month, giving them peace of mind. If you are adamant on going for a fixed rate mortgage, do consider what the market maybe like when your fixed rate deal ends. For example a two year deal may result in your interest being similar to the base rate when it ends however a three or five year mortgage may leave you looking for a mortgage when rates are again high.
However while interest rates are so low, with a good chance of them dropping close to zero as we approach the summer, now is not the best time to fix your mortgage.
The best mortgage will be different for different people; the best thing to do is get expert advice. Find an established mortgage broker to find the best mortgage deal for you.
