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Are You Looking For The Best Fixed Rate Loans Deal?
Let over 200 Top UK lenders compete against each other to give you the lowest fixed rate loan available. Fill out the form below to see if you can get a better deal.
Our service is completely free, you pay nothing and there is no obligation. See how much you can save! |
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NO PAYMENTS for the first 5 months on many loans! |
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You can borrow up to £100,000. |
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Spread your payments out and make them more affordable. Repayment periods from 3-30 years. |
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Arrears, CCJ's or bad credit? No problem - All Accepted. |
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Borrow up to 100% of your home's value. |
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Recently, the popularity of fixed-rate loans in the UK has increased. Why is that? Borrowers are looking for additional security in their future loan and payments. That has been due to a reduction in housing prices, and continued limitation on funding for lending. Before considering a fixed-rate loan, think about their features, benefits, and drawbacks:
The “fixed” in fixed rate loan
A fixed rate loan in one in which the interest rate never changes throughout the its entire term. Of course, this most benefits the borrower when rates are particularly low. By “locking in” the low interest rate, you are guaranteed a low interest rate, regardless of how high it rises during the term of your loan.
In the case that interest rates are high, you should select a floating rate loan instead. That is because the rate of the loan would drop as the prime rate drops to what is considered “normal.” A lender’s prime rate is the lowest interest rate that it charges at a certain time, to particular customers.
The pros
Let us return to our discussion of fixed rates. Here are some of the benefits of such loans:
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The main benefit of fixed-rate loans is that the interest rate never changes, even when overall interest rates increase or decrease. Nevertheless, you still keep the option of refinancing your loan into a lower rate.
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As the borrower, you can opt to make bigger monthly repayments, and then earmark the extra balance of the repayment towards the principal. Why is this helpful? The benefit is that you more speedily reduce the loan’s principal balance.
The cons
On the other hand, just as there is no “perfect” loan, you should also consider a few drawbacks of fixed-rate loans. Some Fixed rate loans, can be too pricey for certain borrowers. This is particularly true in environments with high rates. In those cases, no early repayments and rate breaks are available, unlike mortgage loans with adjustable rates.
Also, to avail of falling rates, as a loan holder you would certainly have to refinance. Why is this important? It can not only cost you additional funds for closing costs. You would also have to spend time finding various documentation such as bank statements; taking another trek to the title company’s office, etc. The bottom line is that there is some give and take – extra footwork in exchange for convenience in repayments.
Also for consideration
Finally, you could consider a few other issues, when deciding whether or not to take out a fixed-rate mortgage loan:
If you are a first-time home buyer, a fixed-rate loan is generally a safer option. The risk is lower and the stability is higher. When you know that your interest rate will remain steady, it is much easier to manage your expenses.
Also, ask yourself these questions:
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Are you familiar with the benefits and drawbacks of both fixed-rate and variable-rate mortgage loans?
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How long do you intend to remain in the home?
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If interest rates were raised considerably, could you still afford your monthly payments?
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What is the current environment for interest rates?
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How frequently does the rate for an adjustable rate loan adjust?
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