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Fixed-rate mortgages 'offer peace of mind'
27 February 2008
Homebuyers who are at the limit of the repayments they can afford could find fixed-rate mortgages more attractive, according to an expert.
Fixed-rate mortgages can provide homebuyers with peace of mind and the ability to make financial forward plans as the repayments will remain constant.
Unlike tracker mortgages, which will see their interest rates and therefore repayments rise and fall with the Bank of England's interest rates, fixed-mortgages keep the same rate for the duration of the deal.
Louise Cumming, head of mortgages at the moneysupermarket website, said: "There's absolutely no doubt that people in the first few years of their homebuying lives have to stretch to the absolute maximum of their income. So, what they'll do is take a fixed-rate mortgage for peace of mind."
While the attraction of a tracker mortgage is that if interest rates drop, so will repayments, the risk is always that they will rise beyond homebuyers' capacity to pay, forcing a mortgage change at a cost or a repossession.
