| UK fixed rate
mortgages are generally charged at an initially higher rate than a variable rate.
However, it the will provide the UK borrower with the security of an interest
rate that is guaranteed not to change for an agreed period of time. This type
of mortgage interest rate arrangement will usually go back to the variable rate
once the fixed rate period has ended. The fixed rate mortgage is useful because
it can ease budgeting and provide the borrower with a certain amount of stability
throughout the fixed rate period. One significant issue with the fixed rate is
that if interest rates fall then you could find yourself paying more than the
variable rate mortgage borrower. On the other hand, you will be protected if interest
rates happen to rise.
Fixed rate mortgages usually carry with them a hefty redemption
penalty if the borrower chooses to change mortgage providers during the fixed
rate period, or even for a time after the fixed rate period has expired. Find
out about this before you sign upon the dotted line.
• Variable rate
• Fixed rate
• Discount rate
• Capped rate
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