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.
By : Elisha Burberry
Elisha Burberry is an online, freelance journalist and keen traveller and water sports enthusiast. Originally from Scotland, she now resides in London.
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