You have a plenty of choices when it comes to mortgage and this can be really complicated and confusing. As you have to work out on which of the option suits you the best. You must have to analyze which one is the cheapest along with the interest rates and fees. Here are some of the types of remarkable mortgage options for you to compare and pick the best one out.
Fixed rate mortgage
In case of fixed rate mortgage the rate of interest remains the same for the whole period of deal which may be from one to five years, even though it is possible to get the fixed rate for the ten years. By fixing this rate you get to have the exact idea as to how much your mortgage is going to cost you over the period of years and you can adjust your finance accordingly.
The payment of the mortgage will remain the same despite of the change in the interest rates. This factor is great for the purpose of budgeting.
You have got a fixed rate so when the interest rate goes down you cannot take any of the advantage from it. Say for an example if you have a deal of six years mortgage then you are locked up for six years in the same interest rate even when you want to get out of it, you cannot or else you have to pay big amount of penalty. So think twice before opting for the long time so that you don’t have to regret later by paying a hefty penalty.
In case of tracker mortgage the interest rate is connected with that to the interest rate of the England based rate. As the rate of England changes, the rate of mortgage based on tracker also changes. Trackers are available with fixed rate mortgages it usually for a period between two years to five years. Any change before the term can cost you with penalty.
The rate of tracker mortgage is comparatively lower than the fixed rate mortgage. You can have a track on amount even it is variable as it relates to the base rate.
The level of security of tracker is not the same with fixed as the rate is variable. This means that your monthly payments can go up anytime and you should be prepared for this.
Another type of variable mortgage is discount mortgage. It’s like tracker mortgage but it is not linked up with the England rate. It is related with the standard variable rate. This standard variable rate is of the lenders.
The rate of interest is lower than that of fixed mortgage rate. As a matter of fact the discount is variable the rate can either go up or go down.
The level of transparency in case of discount mortgage is very low. That means the lender can change the rate at anytime he wants. Thus it can happen that the rate bounces up at a time when you are not expecting it to go up.