Is it right for me to fix my mortgage or to have a variable rate?

Is the most commonly asked question to Knebworth based Independent Mortgage Brokers ‘Mortgage Advice Network’.
Gary Wright, Partner of Mortgage Advice Network says. “Over the past 12 months we have seen a significant increase in the number of clients wishing to switch their mortgage to a variable rate. With a base rate of 0.5% and products on offer starting as low as 1.98%, variable rates such as a ‘Tracker’ or ‘Discounted’ rate mortgage is looking more attractive than ever.
However, even though in many cases a variable rate is appropriate, all clients should seriously consider any increases a variable rate could bring, and ensure that this is factored into their affordability and attitude to risk.
Not so long ago the Bank of England held the base rate at 5.0%, currently the base rate is just 0.5%. Many new variable rate mortgages ‘track’ the base rate by as much 3 % above, which would mean a pay rate of 3.5% at current rates. However if or when the Bank of England increases rates back to 5%, this would mean a new pay rate of 8.5%.
This creates a significant increase to a mortgage payment, an increase which the customer may not be able to afford. Often clients are tied into their mortgage product, which would often result in a significant penalty charge if the client wanted to choose a new product.
Therefore we would urge all customers to think carefully about their own circumstances when choosing a new mortgage product.

Gary Wright CeMAP, Partner of Mortgage Advice Network

Gary Wright CeMAP, Partner of Mortgage Advice Network

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