Fixed Rate Mortgages [mortgageloan-processor.blogspot.com]
Bill Rayman for www.mortgagehelplosangeles.com and Mortgage Capital Partners 310-295-6213 Let Bill answer all of your questions offer you direction on your mortgage needs. In this installment, Bill explains the difference between the "APR" and the "Note Rate." Produced by www.Page1Listings.com Music courtesy of Kevin Macleod at www.incompetetch.com Visuals courtesy of www.freepixels.com and www.dreamstime.com
mortgageloan-processor.blogspot.com Mortgage Terms: Annual Percentage Rate "APR" and "Note Rate" Compared by Los Angeles Mortgage Broker
With fixed rate mortgages the interest rate is fixed at a certain percentage for a specified period of time or with some lenders for the life of the loan. Fixed rate mortgages are useful when it comes to budgeting as you know what the repayments will be every month. They also protect the borrower from interest rate fluctuations and potentially higher repayments.
Fixed interest rate mortgages can be arranged on an interest only or repayment basis. Applicants who are employed, self employed or self certifying their income, (self certified mortgages are usually available when you have a large deposit to put down) are all eligible for such mortgages.
In the UK the rate that lenders fix your mortgage on is decided by the Bank of England's base rate. Lenders usually use the Bank of England base rate, which is what they borrow the money at and then add a percentage on top to arrive at the interest rate you pay.
With the current credit crunch central bank base rates are very low.
To Secure the best fixed rate mortgage you need to compare what different lenders have to offer as well as early repayment and arrangement fees then choose the mortgage that is best suited to you.
Pros
A fixed rate mortgage may be of benefit in the following circumstances:
You need to stick to a strict budget, fixed rate mortgages are usually popular with first time buyers for this very reason.
You think the Bank of England base rate will rise higher than the rate lenders are currently offering
Cons
The drawbacks of choosing a fixed rate mortgage include:
If you take a this kind of mortgage you will not benefit if there is a drop in the BOE base rate
Most lenders have early repayment charges these apply if you want to repay your mortgage or switch lender within the fixed rate period
After the fixed period ends fees are usually much higher than those the bank offers to new customers.
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