Fixed rate mortgage vs variable rate – which is the most cost effective?
The current market uncertainty appears to have most borrowers skittering towards the certainty of a mortgage with a fixed rate.
On the surface, you may think that a fixed rate would work out to be cheaper overall and would shield you against the predicted rate rises between now and 2021.
You may also assume that paying your lender’s SVR would be more expensive in the long-run and more unpredictable. However logical this thinking is, you may be surprised to find out that market analysis has demonstrated that the average SVR would have to rise by 1.00% before it became more expensive than the average fixed rate deal.
This means that if you’re considering opting for a fixed rate deal to save money, you may be better off obtaining a discounted SVR and remortgaging further down the line.
However, the plethora of products out there with their mind-numbing variations of terms, conditions and incentives make it a challenge indeed for the average person to make the right choice.
What, then, should you do?
As a leading independent mortgage broker in the UK, Deal Direct would always advocate that you seek expert advice to properly evaluate your options.
Everyone’s circumstances and priorities are different. Consequently, where a fixed rate mortgage may have suited you 3 years ago, now a variable rate may make more sense. As experts in the mortgage industry, Deal Direct is best placed to help you make the right decision for you.
To save money and eliminate both the uncertainty and confusion that surrounds the different types of mortgages available, consult with Deal Direct.
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