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Fixed or variable? A note about mortgages...

By Matthew Plant - Financial specialist

22 March2010

Fixed-rate mortgage or variable? It`s a question which chartered financial planner Tim Twiddy looks at, writing in The Press and Journal today.

The article takes a look at the different mortgages which are available, and how the prices vary in today`s market. Right now, for example, `All the lowest-rate deals are variable rates, which means that if the base rate rises then so will your mortgage payments`.

For every 100,000 your mortgage is worth, Mr Twiddy states, a 1% increase in your mortgage rate would add just over 80 to your monthly mortgage payment.

A fixed-rate mortgage, of course, would let homeowners avoid the risk of rises - although `the only downside is that fixed rates are higher than trackers at the moment, so if rates don`t go up you could end up paying more than you needed to`.

Right now, there`s a lot of uncertainty about the country`s economy in general, and that can have a big effect on the mortgage market. The more inflation rises, for example, the more likely the Bank of England will be to raise the base rate, which is currently at the all-time low of 0.5% - but which can`t stay there forever.

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Tags: mortgage, mortgages, mortgage advice, fixed rate, mortgage rates, variable rate mortgage, variable rate

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