Mortgage Best Rate » Fixed Rate

Fixed Versus Variable – the Mortgage Battle

admin — Sat, 26 Jun 2010 02:33:24 +0000

When getting a mortgage, especially if you’re a first time buyer it can seem a bit daunting, with all the jargon flying about fixed rate, variable rate, tracker etc. It can feel confusing when trying to get a mortgage sorted coupled with the pressure and time constraints to get all the paperwork sorted for your new house it can be a pretty daunting task.

This article will hopefully give you a general idea of what each one is and whether it suits your situation as fortunately there are many different types and they cater towards all eventualities. The main point to make clear is that one mortgage deal may be suitable for one person but not for another, so it’s best to look into possibly getting financial advice.

Firstly a lot of mortgage lenders tend to offer attractive deals to get you onboard, these normally last for around two to five years, during which you get a fixed or variable rate, after this period ends you begin paying back at the lender’s standard variable rate. This is normally 2% above the bank rate, it is at this point where some lenders allow borrowers to pay a small cost to change providers and take advantage of more deals again. “Playing” with the system this way ensures you can always have the best deal, assuming inertia doesn’t keep you with your original lender!

Standard Variable Rate mortgages

This mortgage tends to be reflective of the Bank of England’s rates, although this is not a certain measure as lenders are not obliged to reduce their rates if the bank does. People who don’t follow the value of their mortgages may end up with this kind, and the repayments are not that competitive unfortunately.

Discounted Rate mortgages

These rates tend to follow the previously mentioned Standard Variable Rates, the rates tend to be more attractive than the fixed rate ones but is risky as it follows the bank rates which can rise unexpectedly.

Tracker mortgages

Tracker mortgages are very similar to SVR mortgages however it is relative to the bank’s rates at all times, so when it drops by 2.75% it will go down by that much, not 2.0% if you were on a SVR mortgage. This is a bit of a double-edged sword as if the bank’s rates rise so will yours.

Fixed Rate mortgages

These are the most secure in that you will never rise or fall, the trouble is to counteract this the rates are normally set high to start with, in the UK it is popular to get a fixed rate mortgage for two years or longer, the main consideration is to make sure that your loan is portable should you choose to move house.

Finding a Mortgage

admin — Fri, 25 Jun 2010 18:10:56 +0000

The first thing that you will need when planning to purchase a home is financing. For people who do not have the available amount to purchase such property will turn to mortgage loan. This is why it is essential for most to learn how to look for a good mortgage.

Most people would look for lenders who offer the least interest rate. Although loan applicants should compare the interest rates, this should not be their only basis in choosing a lender. It is important that significant factors be considered before choosing a mortgage. Among them are the points and closing costs. Below is a discussion of these different fees.

Points

Points are additional charges that need to be paid after finalizing the loan. This amount is just a percentage of the approved mortgage loan. The borrower has the option to pay this after his loan is approved. He can also pay this together with his monthly mortgage. It would be best to pay this upfront. This way, the borrower does not have to accumulate interest for this fee.

Closing costs

These charges need to be paid after finalizing the real estate transaction. This is needed for the official transfer of property ownership. The amount for the closing cost varies. This is because of the closing costs cover several expenses. Among the costs that need to be settled are filing fees and title insurance. You will also need to pay the lender, surveyor, local government and the title company. This cost can greatly vary. Make sure that you look into this before deciding which mortgage to choose.

Another thing that you have to note of is the different types of rates available to you. There is an adjustable rate mortgage or the ARM. Many choose this type of rate because the initial rate being offered is low. However, the low rate will not last. The lender has the option to raise or lower the rate depending on the index changes. The rate can go up if the economy is not stable. This is why you have decide very carefully. A fixed rate may be slightly higher than the ARM but you can be sure that it will not change. If the difference between the two types of rate is not that significant, it would be best to choose a fix rate.

The reason why you should not base your decision to rates alone is the other considerations that you need to make. The length of the term is one. You may be paying higher rates for a fifteen year mortgage than a 25 year mortgage. However, if you calculate the payments you will accumulate, you will see that the 15 year term will allow you to save more.

Take your time in finding a good mortgage. You can start your search online. Compare the rates and deals. You can also turn to the yellow pages and call the different lenders in your area. Note of what their terms and choose one that works best for you. You can also contact a mortgage broker to help you out.

A Fixed Mortgage Is The Right Way To Go!

admin — Sat, 22 May 2010 17:01:45 +0000

It doesn’t matter whether you’re a first-time homebuyer or an old pro, you are likely to find the entire process of getting a mortgage can be gut wrenching. Making the most of the situation is possible, if you think clearly and examine all the options carefully. One of the biggest things you’ll need to consider is what type of mortgage you want. You will find there are two major options: adjustable rate and fixed rate mortgages.

Both adjustable rate and fixed rate mortgages will work to get potential homeowners into a home. Almost every bank, credit union and lending company will offer loan programs that cover both types of mortgages. But, for many homebuyers, the fixed rate mortgage turns out to be the more desirable lending vehicle.

Why is this? A fixed rate mortgage might not offer the flexibility and chances for lower payments than expected that an adjustable rate mortgage does, fixed does provide people with a better sense of stability. There are a number of advantages to the fixed rate mortgage that make it so appealing. They include:

* Rates don’t change. A fixed rate mortgage is stable in its very nature. Whatever interest rate is present at the beginning of the loan is present at the end. While this means payments won’t go down with interest rate changes, it also means they won’t go up. Many homeowners prefer this for budgeting reasons and security.

* Fixed rate mortgages enable homeowners to plan better. Since a homeowner will know exactly what their payments will be no matter what, this type of mortgage takes the “surprises” out of making the bills. This is good for those who don’t have an ability to handle higher payments from time to time. It’s also a smart idea for those who are having trouble dealing with the little surprises homeownership comes with in and of itself. The ability to plan can also enable a great ability to pay bills on time and improve credit ratings so a better fixed rate mortgage can be obtained down the road.

* Ability to lock in a rate. A fixed rate mortgage obtained at the right time can ‘lock in’ rates that are more favorable. Those who happen to have good credit and get fixed rate loans at times of lower interest rates will find they might pay a whole lot less over the life of a loan than someone who buys into an adjustable rate loan.

Buying a home is a very big deal. Many who go into homeownership don’t realize the kinds of financial surprises that go along with it. To ensure at least one surprise doesn’t happen, many borrowers opt to go with fixed rate mortgages. Providing payments that stay the same no matter what happens to the market, a fixed rate mortgage enables planning and can even give a peace of mind that homeowners appreciate.

While a fixed rate mortgage is the choice of many, it isn’t the only option. Borrowers should carefully weigh all their options and choose the best one to meet their personal needs and circumstance.

Fixed Rate Mortgages Remain Borrower’s Choice

admin — Wed, 10 Mar 2010 22:44:58 +0000

It’s a fact that many of us are confused when it comes to mortgages, you can choose to have fixed rate or variable or tracker, in some adverts on the TV they produce all manner of combinations of these and all it manages to do is confuse the general public who end up reacting to all the news about lending being reduced and panic buy a mortgage with no consideration of how good it is.

In recent years more people have been taking out fixed rate mortgages as they don’t want to ride the rollercoaster of interest rates with variable rate mortgages. A recent survey found 35 percent of people would opt for a fixed rate mortgage rather than a variable one, this figure was up 13 percent on last month in February.

What makes this figure strange though is that in the past month the Bank of England has cut its base rate from 5.50 to 5.25 percent, and this has had little or no effect on borrower’s choices. More people are choosing long term fixed mortgages for periods as long as five years, with some organisations suggesting that even longer periods such as ten or twenty-five year mortgages will help promote stability in the mortgage market.

The same study also found that a worryingly large percentage of borrowers do not understand the mortgages business fully and so may get stuck with a mis-sold mortgage, despite implications that bank rates have no way to go but down. The current economic uncertainty seems to have borrowers spooked and so they go for fixed rate mortgages.

So you can understand the confusion with mortgages, on one side you’ve got an expert saying you should be going for infinitely long term fixed mortgages, whereas someone else says you should be considering variable or offset mortgages as the rates are supposedly meant to drop. The only definitive answer is that every case is different and what’s right for person X is not necessarily best for person Y. If you are considering a mortgage or are up for renewal soon and think you’d be better off elsewhere then make sure you get guidance from an advisor as they will be better equipped to deal with your case.

30 Year Fixed Rate Mortgages Modernized

admin — Thu, 18 Feb 2010 17:01:33 +0000

30 Year Fixed Rate mortgages are now thought of as old fashioned. We use the words “standard” or “classic” or even “conventional” to describe one of the most popular loans in history. You may be surprised to know that the history of the 30 year fixed rate mortgage is not too long, and in fact its popularity a relatively recent affair. In fact, the 30 year fixed rate mortgage was introduced during the New Deal of President Franklin Delano Roosevelt’s administration through the creation of the FHA, or Federal Housing Administration.

Prior to the new deal, mortgages were primarily of the “balloon” variety, similar in concept to an auto lease. You could make payments each month for 20 years and still owe the bank a large lump sum at the end of the loan. More disturbingly, mortgages made prior to the advent of the 30 year fixed often had a “call” provision. You may have heard the expression of a bank “calling” a loan before, even if it was in an old movie. What this means is, unlike the fixed rate mortgages of today which have a definite end date, a bank prior to Roosevelt’s FHA could demand immediate payment at any time, regardless of how many years were left on the loan. If the borrower could not refinance, they would lose their home to the bank in a foreclosure. And lose them they did, by the hundreds of thousands at the very height of the Great Depression.

Roosevelt’s administration devised a new concept in banking, a loan which had a fixed period of time, called a term, during which a fixed amount of principal and a fixed or variable amount of interest would be paid back. In full. This new “fully amortizing” loan consisting of principal and interest was a major innovation in banking, and resulted in the explosion of home ownership that we have had in the USA since World War II.

The availability of cheap, safe home loans with no surprises may seem old fashioned today, but when we look at today’s market conditions, where interest rates rise daily and the mortgage industry roils under the burden of hundreds of thousands of bad loans, old fashioned 30 year fixed rate loans don’t seem like such a bad choice do they?

The problem most borrowers run into when they look to refinance into a 30 year fixed rate mortgage is that their payments look like they are going up. And in many cases this can be true, because not all borrowers qualify for the best rates, and qualifying for mortgages is harder today than it was five years ago as lending standards tighten. Whereas 30 year fixed rate mortgages used to be considered affordable by comparison to their competition, over the past 20 years they have become increasingly expensive compared to Adjustable Rate Mortgages.

A newer issue that affects many borrowers seeking to refinance into the security of a 30 year fixed rate is that they would have to give up some of the flexibility of their current Adjustable Rate home loan. This particularly affects borrowers who are currently in Cash Flow or Payment Option ARM mortgages, which allow borrowers to defer interest in exchange for home equity to obtain a dramatically lower minimum payment each month.

30 year fixed loans are good for a lot of things, but flexibility has traditionally not been one of them. Until now that is. New programs have been introduced over the past several months which combine the safe, secure dependable 30 year fixed rate mortgage with the powerful cash flow options of ARM mortgages. The result? The 30 Year Fixed Cash Flow mortgage. Low payments, Fixed Rates, and if you want to hold on to it for 30 years you’ll own the home at the end. They are incredible loans, allowing you to pay as little as $1100 a month as the minimum payment on a $500,000 mortgage, while maintaining a fixed rate for the life of the loan. No nasty surprises, no nightmares about your mortgage. Just a smart choice made more affordable, and surprisingly easier to qualify for. Provided that you have been paying your mortgage on time and have at least 20% equity in your home, these loans are generally available with no minimum credit score requirement, and certain lenders don’t even charge an appraisal fee upfront, making refinancing into a30 year fixed rate mortgage with a cash flow option one of the easiest, most effective ways to avoid the high payments you may face if your adjustable rate mortgage’s introductory rate is about to expire.

Bringing old fashioned sensibility to the creative financial options of today’s modern mortgages is a great fit for borrowers from nearly any walk of life, however it is important to note that only a handful of lenders currently offer this program. If your mortgage company cannot help you obtain a 30 year fixed cash flow refinance, feel free to contact us and we’ll try to steer you in the right direction. As always, our phones and our emails are open to your questions. Until next time, Live Smart.

Should I go Variable or Fixed Rate Mortgage ?

admin — Mon, 08 Feb 2010 07:30:11 +0000

There’s a lot to consider these days. Variable rates look great but what are the pitfalls. Fixed rates are exceptionally low as well. Do I want security or big savings? What are these 2 rates based on? Variable rate is based on the Bank Prime Lending rate which is what financial institutions charge to the consumers. Bank of Canada Lending rate is based on the Central Bank Rate (the amount of interest the Bank of Canada charges financial institutions for short term loans). As the Central Bank Rate increases or decreases, so does Bank Prime and in turn the variable rate. There is a 2% spread between these rates. The Central Bank rate is a .25% and has been since June 2009. It is expected to stay there until at least June and perhaps as late as fall 2010.

The 5 year fixed rate is based on the bond market. As the bond market increases or decreases so does the 5 year fixed rate.

If Bank Prime increases, that doesn’t mean that the fixed rate will increase or vice versa. Since January 2000 the average weekly Prime rate has been 5.09%. Conversely the average weekly 5 year fixed rate has been 6.89% during the same time period.

Just a few years ago, it was clear that going with a variable rate mortgage would save consumers money. But heavy discounts on fixed rate mortgages and the narrowing spread between short-term and long-term interest rates have made the choice today less obvious.

Instead of trying to guess where rates are headed, consumers would do better to think about their own situation. They should evaluate their personal balance sheets and risk tolerance. The decision of whether to go short (variable) or long (fixed) will depend on the consumers’ tolerance for risk as well as their ability to withstand increases in mortgage payments.

The first time homebuyer or those with minimal down payment represent the perfect consumer to go long-term fixed mortgage rate. If the consumer is at or near their maximum GDS/TDS ratios, they cannot take the chance of increasing interest rates. The worrywart, who is constantly looking at interest rates and can’t sleep at night wondering if it is time to lock in, should also go long-term fixed mortgage rate. The seasoned veteran who has plenty of equity in their home or has little time left on their mortgage, i.e. 5 to 10 years remaining on their amortization, can afford to go variable rate and take the risk.

Something to keep in mind is that variable rate mortgages allow consumers to lock in to a fixed rate at any time without costs. While there’s no up-front cost to the change, not all lenders will lock in at the fully discounted five-year fixed rate mortgage. Consumers should be sure to ask their lender if they will get the same fully discounted fixed rate if they decide to lock in.

Finally, if you are not certain which rate is best for you most experts suggest that you consult a mortgage professional who will ask you the right questions and find the best mortgage rate and terms for you. For more information visit Mr. Cooke’s website at http://mortgagealliance.ca/davidcooke

Which is Better – Fixed Rate or Variable Rate?

admin — Mon, 28 Dec 2009 23:24:38 +0000

Interest rates change so much it’s hard to keep proper track of them. Yet they affect our lives in lots of different ways – not least in the amount we pay for the privilege of owning our own home every month, and in the amount we earn on our savings.

When you buy your own home you tend to start praying for lower interest rates, as they will directly affect the amount you have to pay back each month. But if you choose to repay the amount on a fixed rate deal, you don’t need to worry. Or do you?

Its small wonder then that home buying is fraught with tough decisions to be made and questions to be asked. Owning your own home is a big decision, but it doesn’t have to cost you more than is absolutely necessary.

In fact, more and more people are considering remortgages in order to take advantage of a better interest rate than the one they are already on. A fixed rate mortgage is ideal if you are a first time buyer and you need to know exactly how much you will be paying for your mortgage every month, but as interest rates change it can turn out to be costly.

Variable rates are usually cheaper than fixed rates if you compare them side by side, but as time goes on this situation can and usually does change. If interest rates start to rise sharply, unfortunately so will your mortgage payment.

UK remortgages can get you out of an existing mortgage that is no longer giving you value for money, and transfer you into one that could save you a considerable amount every month. If you aren’t sure whether you want to be locked into a long mortgage term, look or a short term fixed rate deal which runs for a year or two. You can then look for another one once the time is up.

Obviously the longer your fixed rate deal runs for, the more likely it is that interest rates will drop below the rate you are fixed on, meaning you will lose money. But you also need to consider the long term effects of this – you might save more money in the long term, even if you do end up paying more for a few months than you would on a variable rate deal.

In short, your situation will largely dictate what kind of deal is best for you. There is no definitive answer to whether fixed rate or variable rate mortgages are best – it depends on what is happening at the time and what interest rate deal you are on. However, for peace of mind in knowing exactly what your outgoings are, a fixed rate can be the better option.

Are New Stepped Rate Mortgages Just Delaying the Inevitable?

admin — Thu, 24 Dec 2009 16:50:25 +0000

In the UK there has recently been an increase in the number of new stepped rate mortgage products on offer. These products are where the lender offers a stepped phase of interest rates, usually each rate lasts up to a year before you must move up to the next, higher interest rate for the next year. For example, a first year interest rate of 5.99 per cent may be available with a second year interest rate of 6.79 per cent. Usually these type of mortgage products do not charge a fee, making them a very good offer for people coming to the end of a low rate fixed rate deal. 3 or 4 years ago, when interest rates were at an all time low, you could have picked up a fixed mortgage rate in the region of 3.50 per cent!

Imagine the panic setting in for people who initially fixed they’re mortgage rate back in 2003 or 2004. Over the years since then interest rates have continued increasing month after month.

As lenders are now withdrawing their more competitive mortgage products, these new stepped rate offers seem to be the best way forward for customers who may be living in fear of paying a higher mortgage rate.

As you can clearly see the only problem is still the initial first year stepped rate increase to 5.99 per cent in the example. This is an increase of nearly 2.5 per cent; something to bear in mind if you’re still lucky enough to be on a fixed rate under 4 per cent.

Variable Rate Mortgages, are They the Best Choice?

admin — Tue, 22 Dec 2009 23:24:08 +0000

The mortgage market as a whole is in a pretty poor state at the moment, sub-prime lending in the United States has had a knock on effect on banks worldwide and the main effect that people are seeing is that home repossessions have increased exponentially since this tough time has started.

The much publicised collapse of the bank Northern Rock has also contributed to the increasing problems with banks in this country. Credit or any lending in this country is becoming harder to find as banks are busy trying to recoup some of the money lent out in the past few years never mind the thousands of people looking to get new mortgages, credit cards and loans.

In an aid to help ease the impact of this credit crunch the Bank of England’s base rate on mortgages has dropped three times already since December of last year. The most recent of these percentage drops went from 5.75% to 5%. This means that people with variable rate or “tracker” mortgages could have made the best choice as a family with a £100,000 interest only mortgage would now have significant reductions in their repayments by £750 per year.

Before people start scrambling from their fixed rate mortgages they need to know the difference between the two type of variable rate mortgages; Tracker mortgages follow the Bank of England’s base rate and so if the rate increases or dips then so will the interest on your mortgage. Conversely a discounted variable rate mortgage follows the lender’s Standard Variable Rate (SVR) which doesn’t follow the Bank of England, and can change for the better or worse whenever the lender feels like it.

With the impending prospect of a recession in the United States and the credit crunch in full flow many lenders are reluctant the pass on the savings brought about by the Bank of England’s cuts, for example the troubled bank Northern Rock has only dropped their rate by 0.35 of a percent in an attempt to possibly recover from their near-demise.

Whilst mortgages are a risky subject at the moment it is clear that whilst the variable rate mortgages look the most attractive at this point there is every chance that as time goes by the national rate will rise back up, especially since there have been three drastic drops in the space of half a year. The alternative of a fixed rate mortgage may mean you get a decent deal but paying slightly more.

Long term mortgages (some up to 40 years) may have better rates as you are going to be with then for a longer period of time and more likely to be able to make the payments as they will be spread apart for smaller monthly repayments. Getting a mortgage now or even remortgaging is going to take more time and attention to the details to make sure you don’t end up with a deal that will hurt you in the long run, take all the advice you can get on the matter and don’t be afraid to look elsewhere if you aren’t getting the deal that’s right for you

Mortgage Best Rate » Fixed Rate

Fixed Versus Variable – the Mortgage Battle

Finding a Mortgage

Related posts:

Finding the Best Current Mortgage Interest Rates

9 Steps to a Finding The Best Mortgage for You – Finding The Best Mortgage For You

9 Steps to a Finding The Best Mortgage for You – Your Mortgage Check-Up

A Fixed Mortgage Is The Right Way To Go!

Related posts:

30 Year Fixed Rate Mortgages Modernized

Fixed Versus Variable – the Mortgage Battle

Are fixed rate mortgages better?

Fixed Rate Mortgages Remain Borrower’s Choice

30 Year Fixed Rate Mortgages Modernized

Related posts:

Fixed Rate 30 Year Mortgages-The Correct Mortgage Loan Choice

30-year fixed rate mortgages and are back down to 4.5 percent

Fixed Rate Mortgages Remain Borrower’s Choice

Should I go Variable or Fixed Rate Mortgage ?

Related posts:

Variable Rate Mortgages, are They the Best Choice?

Which is Better – Fixed Rate or Variable Rate?

Fixed Versus Variable – the Mortgage Battle

Which is Better – Fixed Rate or Variable Rate?

Are New Stepped Rate Mortgages Just Delaying the Inevitable?

Related posts:

Mortgages still expensive, despite base rate cuts

Fixed Rate Mortgage Misery?

Homeowners Face Fixed Rate Mortgage Misery

Variable Rate Mortgages, are They the Best Choice?

Mortgage Best Rate » Fixed Rate

Fixed Versus Variable – the Mortgage Battle

Finding a Mortgage

Related posts: Finding the Best Current Mortgage Interest Rates 9 Steps to a Finding The Best Mortgage for You – Finding The Best Mortgage For You 9 Steps to a Finding The Best Mortgage for You – Your Mortgage Check-Up

A Fixed Mortgage Is The Right Way To Go!

Related posts: 30 Year Fixed Rate Mortgages Modernized Fixed Versus Variable – the Mortgage Battle Are fixed rate mortgages better?

Fixed Rate Mortgages Remain Borrower’s Choice

30 Year Fixed Rate Mortgages Modernized

Related posts: Fixed Rate 30 Year Mortgages-The Correct Mortgage Loan Choice 30-year fixed rate mortgages and are back down to 4.5 percent Fixed Rate Mortgages Remain Borrower’s Choice

Should I go Variable or Fixed Rate Mortgage ?

Related posts: Variable Rate Mortgages, are They the Best Choice? Which is Better – Fixed Rate or Variable Rate? Fixed Versus Variable – the Mortgage Battle

Which is Better – Fixed Rate or Variable Rate?

Are New Stepped Rate Mortgages Just Delaying the Inevitable?

Related posts: Mortgages still expensive, despite base rate cuts Fixed Rate Mortgage Misery? Homeowners Face Fixed Rate Mortgage Misery

Variable Rate Mortgages, are They the Best Choice?

Related posts:

Finding the Best Current Mortgage Interest Rates

9 Steps to a Finding The Best Mortgage for You – Finding The Best Mortgage For You

9 Steps to a Finding The Best Mortgage for You – Your Mortgage Check-Up

Related posts:

30 Year Fixed Rate Mortgages Modernized

Fixed Versus Variable – the Mortgage Battle

Are fixed rate mortgages better?

Related posts:

Fixed Rate 30 Year Mortgages-The Correct Mortgage Loan Choice

30-year fixed rate mortgages and are back down to 4.5 percent

Fixed Rate Mortgages Remain Borrower’s Choice

Related posts:

Variable Rate Mortgages, are They the Best Choice?

Which is Better – Fixed Rate or Variable Rate?

Fixed Versus Variable – the Mortgage Battle

Related posts:

Mortgages still expensive, despite base rate cuts

Fixed Rate Mortgage Misery?

Homeowners Face Fixed Rate Mortgage Misery