Fixed-rate mortgages ‘Proving Popular’
Buying your first home can be quite a tricky endeavour unless you seek out first-time buyer advice in London or elsewhere… you could find yourself floundering a little if you don’t speak to someone in the industry like mortgage brokers who know the jargon and who can help you navigate your way through the pros and cons of the financial minefield of buying a house.
Do you know what type of mortgage you’d be interested in, for example? Standard Variable Rate (SVR)? Tracker? Fixed Term? The Moneyfacts UK Mortgage Trends Treasury Report has revealed that people are now overwhelmingly opting for fixed-rate mortgages, with almost all new advances approved for this particular kind of product.
Brief explanation of types of mortgages:
- Fixed-rate mortgage means your monthly payments should stay the same until an agreed date, no matter what occurs with interest rates in the market. Fixed-rate periods come in various lengths, for example, 2, 3 and 5 years.
- Tracker mortgages follow the Bank of England’s Base Rate and rise or fall along with it. The interest rate charged is the Bank of England’s Base Rate plus an agreed margin. There are ‘lifetime’ trackers for the life of the mortgage, and term trackers which can be for 2 or 3 years.
- Standard variable rate (SVR) mortgages; the SVR is the rate of interest that’s usually charged once a fixed rate or term tracker period ends. You can usually move to another tracker or fixed product instead of moving onto a SVR, if you wish.
Generally, there are only around 250-300 tracker rate mortgages on the market, which work in line with the Bank of England base rate, making up less than five percent of residential mortgages, which may also be worth bearing in mind.
The choice between opting for a tracker mortgage or a fixed rate mortgage is down to the risk appetite of the potential borrower, but with nearly all advances being fixed, it seems that nearly all choose to be risk averse during the continuing period of economic uncertainty and favour fixed rate deals.
Knowing the difference between all the products is your first step toward ensuring you choose the right mortgage. Fixed-rate mortgages mean your monthly repayments are the same for the duration of the mortgage deal, but you won’t benefit if the interest base rate falls as with a variable rate mortgage.
Speaking to an independent mortgage broker in London like us here at Greenacre Financial Services will allow you to find out what options are open to you and what will best suit your personal circumstances. Buying a first home is an exciting time, and we aim to keep it that way, taking away as much stress and hassle as possible.
Unlike many of our corporate competitors we are a completely independent Whole of Market Mortgage Broker offering a choice of around 100 mortgage lenders, all authorised and regulated by the Financial Conduct Authority, and up to 25,000 different mortgage schemes, meaning we will be able to find you the best mortgage deals and save you money.