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Fixed vs. Variable Mortgages: Which One Is Right for You?

When it comes to mortgages, there’s no one-size-fits-all solution. Various considerations must be considered when deciding between fixed and variable mortgage rates. In a higher mortgage rate environment like the current one, first-timers or people coming to the end of their mortgage terms may find it quite challenging.

Choosing the right mortgage type can be complicated if you are a first-time borrower. While you need the assistance of a mortgage advisor in Stamford, knowing which mortgage type is best for you is also crucial. For this, you need to understand the key features of both mortgage types and understand which can help you save more money.

Read on and determine which is ideal for you based on your circumstances.

What is a Fixed Rate Mortgage?

A fixed-rate mortgage is a mortgage whose interest rate stays constant for a specific period. This period is usually between two and five years, even though longer loan terms are available. During this period, the monthly repayment amount stays the same even if there are changes in the base rate.

What is a Variable-Rate Mortgage?

The interest rate on a variable-rate mortgage is not fixed. It changes according to changes in economic or financial market conditions. The interest rate on a variable-rate mortgage can either go up or down during the loan tenure, leading to changes in the monthly mortgage repayment amounts.

There are three main types of variable-rate mortgages:

  • Tracker rate mortgages
  • Discount rate mortgages
  • Standard variable rate (SVR) mortgages.

Which Mortgage Type Should You Choose?

Choosing the right type of mortgage will depend on your personal requirements, preferences, and circumstances. Both fixed-rate and variable-rate mortgages have pros and cons.

Fixed-rate mortgages help you set a specific budget for your mortgage repayments. This enables you to set that sum aside money and ensures that you do not overstretch your financial limitations.

Variable-rate mortgages are riskier and more suitable for people with more expendable income. With this mortgage type, it is possible to save more money if mortgage rates fall and stay low for a certain period. However, they may also rise, and you must be prepared to bear the extra cost.

Last but not least, it is essential to consult with an experienced mortgage advisor in Stamford to make the right decision. Your income, risk appetite, and ability to react to mortgage repayment fluctuations will determine your best choice. For personalised advice and the best options, contact David List Mortgage Consultants Ltd.

A mortgage is one of the most crucial financial decisions. Are you planning to opt for a mortgage? Planning it rightly is essential. Accurate planning helps identify potential financial risks and navigate them smoothly, and only a mortgage advisor in Spalding can assist you with this. If you are wondering whether it will be the right decision, you might be influenced by common misconceptions about mortgage advisors. Clearing them is mandatory to prevent missed opportunities, costly mistakes, and to make informed decisions. 

What Are the Common Misconceptions Regarding a Mortgage Advisor in Spalding?

Myth 1: Mortgage Advisors Are Expensive 

  • Fact: Mortgage advisors charge the lenders, not the borrowers. It means you don’t need to pay the advisor and can get the work done for free. The bank or the individual you are taking money from will pay the mortgage advisor. Additionally, most of the time, the advisors receive commission only; they do not charge separately. 

Myth 2: They Recommend A Fixed Lender 

  • Fact: Independent mortgage advisors maintain a list of lenders, including specialists. As a common citizen, you can access these specialists, and they only work with the advisors. Connecting with these dedicated mortgage specialists allows you to take advantage of special offers and tailored packages, leading to flexible interest rates. 

Myth 3: Working With A Bank Makes the Process Easier 

  • Fact: Working with a bank is less time-consuming because they only share their offers. Banks do not extend the offers of other lenders. Therefore, you don’t get the chance to compare it; it’s about closing the deal faster. However, eventually, it leads you to significant losses. You might pay higher interest rates. 

Myth 4: All The Advisors Offer the Same 

  • Fact: There is a wide range of advisors, including those for adverse credit, remortgaging, and high-value loans. You need to connect with an advisor who caters to your interests. The level of experience and expertise controls the quality of advice, lender network and personal support. Hence, selecting the advisor largely controls the success rate. 

Myth 5: Hiring an Advisor Can Slow Down the Process 

  • Fact : Contrary to common belief, hiring an advisor for your mortgage fastens the process. They craft the required documents with a wealth of knowledge, which helps prevent common mistakes and receive approval faster. Additionally, as most of the advisors have a personal relationship with the lenders, they use it for communications. This reduces confusion and helps in getting replies faster than usual. 

Myth 6: Tools Can Do The Job of The Advisors 

  • Fact: Online tools can calculate the budget and interest rates. However, they are unable to offer personalised advice. These tools can’t analyse your financial condition and other obligations; only an advisor can do this. An advisor can assess your income, responsibilities, and credit history and provide advice accordingly.

Hiring a mortgage advisor in Spalding is not overspending or a luxury. It is a practical and utmost professional step to make an informed financial decision. Whether you are a seasoned real estate investor or a novice, consulting with an advisor can help you make the best investment ever. 

At David List Mortgage Consultants Ltd, we have been offering mortgage advice since 1993. Our personalised advice and plans help you to make financial decisions every time. 

Connect to book your consultation now.