The best information on Mortgage rate differences only at MnM Removals
How do fix rates work
When choosing a fix rate it does not change at all, you will be fixed to a set mortgage rate. A fixed rate of 5% over a couple of years will be all you need to pay, even if the interests rates do go up you will not have pat anything extra as you are signed up for fix mortgage. A fix mortgage is like this, the buyer agrees to sign the fix mortgage and in return the lender will give you a special rate for a fixed period of time.
It is best to check with your mortgage lender how long you will be locked into a fix mortgage for, so you can prepare yourself for when the fixed rate comes to an end. Checking the mortgage rate differences can save you time and money making sure you are one step ahead of the lenders.
The really good thing about a fix mortgage is that you will always know what you have to pay and exactly where you stand at all times, helping you to budget your capital for future investment.
Difference of discounts and trackers
Discounts an tracker are types of variable mortgage rates, where the rate you pay can and will at some point go up or down.
If however you do choose a variable mortgage the amount you will pay will be based on the following rates.
Lenders variable rates
A lot of lenders will set the rates themselves because the UK based rates will go up an down.This rate is not offered to new customers just old ones. From the time you decide to borrow the capital from the lender they would have put some sort of deal in place for you to have gone through with them, rather than loose you as customer to rival lenders. In the long run, the lender will often apply charges if you did however pull out of the deal at an earlier stage.
Bank of England tracker rates
A base rate tracker (BRT) has become very popular mortgage since the Bank of England base rate has started to decline. Its best to have the mortgage interest combined with the rates your are currently paying. Lenders will offer a Base Rate Tracker Mortgage this is where your interest rate will be 2% above the Bank of England base rate for 2 years. A tracker base rate means when the UK base rate changes, so will your mortgage rates.
Advantage – If you do how ever have a rate tracker mortgage and your interest rate falls, so will your monthly payments. Tracker rates are eventually lower than the fix rate mortgage
Disadvantages – If however interest rates do rise, you will need to be aware that your monthly payments will rise also. This is similar to a variable mortgage rate that gives you a discount from the lenders standard variable rate (SVR). Where as the Base rate tracker mortgage will monitor the rise and fall of the Bank of England Base Rate (BBR).