Some Benefits of Fixed Rated Mortgages in Harrow
If you are planning to stay in your home for a few more years and would like your mortgage payments to remain at the same rate, then you should consider getting a fixed rate mortgage in Harrow. There are fixed rate mortgages available for a year to five or even 20 years in some cases. Over the term of the fixed mortgage you can be assured that your monthly payments will not go up. When your interest rate is low, it is especially advantageous. It allows you to lock the current rate in for your loan’s entire duration, whether that happens to be 30, or five years, so it safeguards you from future interest rate increases.
There are a couple of things you need to consider when deciding on which type of fixed rate mortgage to choose. A long term mortgage (liked a fixed rate 5 or 10 year mortgage) will have lower monthly payments than a 1 or 2 year mortgage. However, it will have a higher interest rate, which you will be locked into for the entire term of your loan. At times, interest rates might decrease, but you will be stuck with paying a higher interest rate that you locked into.
With a 15 year or 10 year mortgage rate you could also ending paying a higher interest rate than the current rate. However, there is less of a chance for that to happen with a shorter-term loan. Fixed rate shorter term mortgages also come with lower interest rates compared to a 30 year fixed rate mortgage. In addition, it will take less time for you to build some equity up on your house, since with every monthly payment you pay off more of the principal. However, your monthly payment has to be higher for you to be able to do this compared to long term mortgage payments.
Learning More About Long-term Fixed Rate Mortgages
In some suburbs, housing prices are hitting record highs, putting many people’s dreams of owning their own homes out of reach. Interest rates are also rising, which could turn some people’s dreams into nightmares. For this reason, some mortgage lenders are introducing longer term loans such as 20 and 30 year fixed rate mortgages in Harrow so that more potential home buyer needs can be met.
These new mortgage options make is possible for more potential buyers to be able to afford to purchase a home by spreading out the monthly mortgage payments over a longer time period to make them lower, and thus more affordable. It isn’t hard to understand how the monthly payments can be lower if you compare a 1 year mortgage with 12 monthly payments versus a 10 year mortgage with 120 payments on a home. The mortgage payments on the 10 year loan will be much lower.
However, while the repayments will be lower, over the life of the mortgage, the total interest paid for the lifetime of the loan will be higher than the amount paid on a shorter home loan. However, you will still build up home equity since your payments pay for both interest and principal. That is why for home-buyers in Harrow fixed mortgages are attractive options compared to payment-option and interest-only adjustable-rate mortgage, which over the long term can be more costly since no or very little principal gets paid off.
To get mortgage advice on long-term fixed rate mortgages in Harrow, click here.