With interest rates all over the world at an all time low, 2009 is possibly the best time to consider entering the property ladder or moving home. The credit crunch has meant that property prices in the UK have dropped on average by 20% since there height in the summer of 2007. This means that as property prices have now virtually reached the bottom and based on recent mortgage lending data that shows new lending approvals up by almost 31% on February’s figures, now could be the time to buy.
If you are thinking of entering the housing market for the first time or moving up to a larger property the mortgage market has seen great changes over the last 12 months. Gone are the high loan to value mortgages over 90% of the value of the new home, as too have the high income multiplier mortgages of over five times you gross salary. However there are still some attractive mortgages available up to 85% of the value of the property and lenders will still lend up to 4.5 joint income, so it is not all doom and gloom.
One type of mortgage that is becoming increasing popular is the long term fixed rate mortgage. These types of mortgage guarantee the interest rate you pay for a set period of time irrespective of what happens to the Bank of England base rate during the fixed rate period. With interest rates at such a low level it is clear that interest rates will rise at some point in the next twelve to eighteen months. This has made the five to ten year fixed rate mortgages popular with borrowers and although the short term two to three year fixed rates are lower in cost the stability of monthly payments is viewed as vital by many borrows taking out a new mortgage.
Long term fixed rates do have other draw backs as most of them will have what is known as an early redemption penalty if you redeem your mortgage during the fixed rate period. This fee is usually a percentage of the mortgage amount outstanding and can be as high as 5% of this balance. Most of these types of mortgage are portable which means that you can transferee the mortgage to another home should you move, however you must reapply and meet the lenders criteria at this time to do so. Fixed rate mortgages also typically have an argument fee of between 999 and 1999 pounds depending on the interest rate and the lender.
Fixed rate mortgage advice
To find out more information on fixed rate mortgages you can try one of the many mortgage comparison websites that allow you to check the latest rates free of charge. This allows you to check fixed interest rates each week to make sure they are not going up. Alternatively you can speak to an independent mortgage advisor you will be able to regularly update you on the ups and downs of the remortgage market.
Jason Haines is a protection and mortgage advisor at godirect.co.uk, one of the UK’s most trusted information site about personal finance. Here you will find information on all the major mortgage types and the latest information on fixed rate mortgages, and you can save money on your mortgage protection as well.
[tags]mortgage types, fixed rate mortgages[/tags]
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