Fixed-rate mortgages on expensive buys
October 8, 2007 by admin
Filed under News, News-Mortgages
Property investors are advised to take out fixed-rate mortgage when purchasing high-value properties.
According to Bestinvest, when mortgage repayments increase by even a small amount, homeowners paying off debts on a high-value property can find their repayments increasing dramatically.
With any changes to the Bank of England’s interest rate, house prices and borrowing costs are directly impacted. With a fixed-rate mortgage, buyers are not vulnerable to these fluctuations.
Peter O’Donovan, mortgage manager at Bestinvest, advised that young professional first-time buyers should consider a mortgage with a fixed rate: “It obviously is down to the person’s view of risk, and what they have in the background to support their mortgage repayments.
“But in general I would suggest to people borrowing a larger sum for the first time to take a fixed rate, because it’s quite a large part of their disposable income going [towards repayments].”
The latest statistics from the Council of Mortgage Lenders show that 3,000 mortgages worth £250,000 to £500,000 were taken out in July this year by first-time buyers. This represents a rise from January’s figure of 2,000.
