Home Insurance
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Mortgages
Interest rates
Interest rates vary wildly from provider to provider but follow some basic themes. Variable rate follows the Bank of England's base rate, but with an additional amount tacked on for the mortgage provider. The Bank of England can change their base rate each month, they don't as it happens, but they could, and as a result any mortgage that is on a variable rate basis could mean that each month your payments change. Of course the base rate could go down, thus lowering your payments, but it could also rise, meaning that you will have to pay more that month… not an attractive position for many first time buyers who tend to like the certainty of a fixed rate mortgage. With this type of product the interest rate on your mortgage capital is fixed for a period (say three years) which means that whatever happens to the base rate your monthly repayments won't change. This is a compromise as if the base interest rate drops then you will still be paying at a higher level, however if the rate rises you will be shielded by this effect and wont pay anymore each month… until your fixed period comes to and end – then you have to shop around again and try to find the best deal again. Some mortgages have a low introductory fixed period which rises after a few months, or even moves to a full variable rate basis. Essentially you need to talk to a specialist mortgage provider or independent broker to see which type of product is going to suit you and your financial situation best.
You can visit mortgage brokers by clicking on any of the links below:
Don't forget that however much you borrow the lender will expect to be paid whether you are able to pay or not – it makes sense to insure your mortgage payments, so that even if you cannot work through accident, sickness or unemployment your home is safe.
You can get a mortgage protection quote here.