Fixed rate mortgages for people with a poor credit history.
So what is a fixed rate mortgage? This type of mortgage / remortgage is where you and the mortgage lender agree to fix the interest rate owed on your loan for a set length of time, this all depending on how stable the world credit situation is.
The period of time is usually between 1 and 5 years but could be longer. (That simply depends on the exact mortgage deal that we can find for you).
After the agreed period, the interest rate owed on your loan usually reverts to that lender's variable rate (which is often when people start to consider moving their mortgage).
The good point about a fixed rate mortgage is the you know exactly what you'll be paying, that means no surprises and that is good news. The bad news is that if by chance interest rates drop below the level you agree to, that you will be paying more than if you'd chosen a traditional variable rate mortgage.
But as we know interest rates can rise, and at least you're not gambling with your home, something especially important to those with a bad, or poor credit history. After all, that is what you are trying to avoid and what we, at Berkley Vittoria can help you with.
Some other points about fixed rate loans or mortgages:-
- If you leave before the agreed term the early redemption penalty is usually significant. This could be as much as six months gross interest if you leave a five-year fixed rate agreement.
- Some penalties could even go beyond the fixed-rate period. This is called an "overhanging redemption penalty", and means that for a time you will be charged the lenders variable rate and can't move your mortgage.
- So always read the small print and ask us as many "stupid questions" as you feel like. We'll be sure to give you the best guidance, but you must be clear on what everything means.
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