As one of the most popular mortgage types, it’s important that you know what a fixed mortgage is and how they work. When it comes to your remortgage, you may want to explore your options, therefore, finding out about the different types of mortgages could help you make your decision.
Your interest rate on a fixed-rate mortgage will remain the same throughout your fixed term. Whether this is a longer term or a shorter term, either way, your interest rate will not change.
Typically, the longer that you fix in your mortgage for the higher the interest rate will be. Therefore, if you are looking for a lower rate mortgage, you may need to look at taking one out over a shorter term. The only real downside to short term mortgages is that your renewal will be due more often. Short term fixed deals usually last 2-5 years.
During your Remortgage in Leeds, it may be worth looking at fixed-rate products so that you know exactly what you’ll be paying over your fixed-term.
If you are happy with tracking a slightly higher interest rate over a longer period of time so that you don’t have to remortgage and pay the extra fees that are involved with taking out a new product, a medium to a long-term fixed mortgage may be more suited to your needs. 5-7-year fixed-rate mortgage products tend to be the most popular amongst people in this kind of situation.
Despite the high interest rates, if you still want to take out a product over a long term, you could look into the possibility of taking out a 10-year fixed-term rate. Although, 10-year terms are a little harder to find and you may need to approach a specialist lender to take out one. They also come with high costs as you’re locking in for a decade, a lender needs to be able to trust your affordability throughout the term.
In comparison, both medium and long term fixed-rate products have their advantages and disadvantages, however, it mainly comes down to your personal situation and what type of product you are looking for.
Upon remortgage, you will face booking and arrangement fees. You will need to consider these costs before taking out another product. Sometimes, you will be asked to pay these fees upfront just in case your purchase falls through. Your Mortgage Advisor in Leeds should go through these costs with you before you take out a new product with them.
If you are taking out a long-term mortgage product, you may be able to avoid these fees.
If your financial situation changes unpredictably and you pay back your mortgage earlier than you originally planned, you may face an ERC. An ERC or an Early Repayment Charge is a fee that you’ll receive for paying off your mortgage term too early.
An ERC is calculated through a percentage of the amount that is still left on your mortgage. For example, if you have £200,000 left on your mortgage and you paid off your term early, with a 2% fine, you may face an ERC of £4,000.
Some people will deliberately pay off their mortgage term and face an ERC. This could be because they’ve acquired a large sum of money for some reason and want to pay off a part of their mortgage, they’ve seen a new mortgage deal after a long term and they want to access it early or simply that they are at the end of their whole term and just want to pay it off.
Make sure that a fixed-rate mortgage is right for you before taking one out. It could turn out that another product is more suited for you.
There are many different types of mortgages available on the market, therefore, it’s wise to shop around first! We would always recommend speaking with a Mortgage Advisor in Leeds to get some helpful information and tips.
You can easily find out more information and get Remortgage Advice in Leeds by contacting our team. We offer a free Remortgage Review for every customer – all you have to do is book your appointment online.