The Money Stop

Consumers in the UK can enjoy a choice of mortgage options these days, and no matter what your needs and circumstances there is a good chance that there is a suitable mortgage product on the market for you. When it comes to mortgages consumers can enjoy options such as the standard variable rate, the fixed rate, base tracker mortgages, capped rate mortgages, and more. The most popular of these are the variable rate mortgage and the fixed rate mortgage, both of which offer benefits as well as disadvantages.

The variable rate mortgage is a loan on which the interest rate can fluctuate throughout the term of the loan based on the interest rate set by the Bank of England. This means that if Bank of England interest rates fall, your mortgage interest rate will also fall, and therefore your monthly repayments will fall. However, if Bank of England interest rates rise, then your mortgage interest rate will also rise and your monthly mortgage repayments will go up. Depending on the size of your mortgage and the amount by which the interest rate falls or rises, the difference in your monthly repayments can be quite dramatic.

Variable rate mortgages are a good choice for those that can afford to take the risk of riding repayments and are able to manage their budget effectively even with fluctuating repayments on the mortgage. This is because consumers can make an impressive saving in the event of a drop in interest rates. However, it is important for those thinking about a variable rate mortgage to consider whether they will be able to keep up with repayments in the event of an interest rate rise, as this could really push up the monthly repayments on a large mortgage.

If, one the other hand, you want to know exactly how much you will be paying on your mortgage each month, and you don’t want to run the risk of being hit with rising interest rates then you may prefer to opt for a fixed rate mortgage, where the interest rate is fixed for the specified period or throughout the loan. These fixed rate mortgages are offered at a higher rate than the variable rate mortgages, but the interest rate will remain the same even if the standard variable interest rate rises. On the downside, if the variable rate should fall the fixed rate mortgage will still remain static, which means that you won’t benefit from any drop in monthly repayments.

Related Posts

Mortgage borrowers urged to “think carefully”

Following the Bank of England's decision to keep the base rate of interest on hold, one expert has advised borrowers to consider the possible downsides of taking out a variable-rate mortgage.Mark Blackwell, director of intermediary

Repayment Vs Interest Only Mortgage

If you are on the lookout for a mortgage to purchase a property in the UK you could find yourself in something of a minefield, with a wide range of mortgages to select from, each

Are you looking to refinance your mortgage?

People in the UK have become far more savvy about finances over the years, and when it comes to mortgages many people have realized that there are some great deals out there that could save

Banks top mortgage lenders table

Banks remained the cheapest mortgage lenders for existing borrowers in 2006.That is according to a new study by financial research company Defaqto, which also discovered that there was a huge difference between the cheapest and

Interest Rate Rise Could Mean Nearly £300M More To Pay For Homeowners

A recent study carried out in relation to the recent interest rate rise enforced by the Bank of England has shown that mortgage payers in the UK could be paying nearly three hundred million pounds

Compare Mortgages Online - UK Mortgage Comparison

There are many different types of mortgages available in the UK these days, and in order to find the right mortgage for your needs you need to compare mortgages to see which one best suits

Brits want fixed-rate mortgages according to research

Over half of British consumers would choose a fixed-rate mortgage if given the choice, reveals new research. Findings from the Fairinvestment.co.uk shows that 30 per cent of these respondents said they would favour a short-term

Tracker Mortgages

These days consumers in the UK can select from a range of mortgage types and deals, with something to suit most needs, circumstances, and budgets. One type of mortgage that is available on the market