According to the Bank of England, interest rates on fixed rate mortgages are lower than they’ve been in quite some time, and show signs of continuing to drop over the next several months. While some lenders are now more liberal in evaluating mortgage applications, the real estate market is still somewhat sluggish. Now may be a good time to look into a two-year or four-year fixed rate mortgage before buying begins to pick up and the rates begin to increase once more.
As with any type of mortgage, obtaining the best rate for your short-term fixed rate mortgage means that you must have at least a minimum deposit to qualify for the best that lenders have to offer. There are some lenders who extend equitable rates for a deposit of as little as 25%. Keep in mind that the duration of the mortgage also affects the interest rate. For those who can manage two-year fixed rate mortgage, the rate will be noticeably less than interest on a five-year mortgage plan.
To determine if a short-term fixed rate mortgage is right for you, take a long look at your present finances. What is the ratio between your current debt load and your income? Determine what type of monthly mortgage payment you can reasonably afford. Also consider the amount you have set aside for a deposit. Don’t forget your current credit rating. Even if your circumstances have improved over the last year, there may still be lingering negative items on your credit reports that would discourage lenders. Do what you can to resolve those outstanding negative items, then talk with various lenders. You may be able to obtain a better interest rate than you think, and be on your way to becoming a homeowner.
Tags: mortgage
