As we are seeing base lending rates plummeting to an all time low, now is a good time to be looking for a new mortgage offer in the hope of saving some monthly financial budget, and hopefully a lot of cash in the future. But if you are thinking about starting to compare today’s mortgage rates, what precisely are all of these different types of mortgages available from the lenders?

First, for about 30% of home owners, the fixed rate mortgage is the favourite type of product. With this type of mortgage you agree with your selected lender that for an agreed length of time you will be charged a fixed . The fixed term duration might be a few months up to a few years, it depends on the offers you can select from on the market. How attractive the interest rate is will vary by on how long you are signing up to it. The briefer the time period, the more reduced the chance there is to the lender that the rates could go back up in that time period, so normally the interest rate is typically lower. It is this fixed aspect of the mortgage that many home owners do want. For the agreed time you know precisely how much you will be spending on your mortgage. There will be no interest rate increase surprises to affect your budget. You know that unless you change your mortgage, precisely what you will be paying.

But this is not just an advantage, it is also seen as a disadvantage. If base rates do fall more, as has been taking place currently, then the rate that you are paying doesn’t fall. And this is the chance of this sort of mortgage. You know exactly what you will be payingeach month, regardless of whether interest rates increase or decrease.

When your fixed rate mortgage has come to an end, you can possibly then have a tie in period with the lender during which you have to remain with the lender and pay the variable rate product. This is the return for the lender when they have given you a good fixed rate mortgage. A variable rate mortgage is the basic mortgage that a lender will offer. It is their basic no frills mortgage and moves with the base rate, although not always matching the base rate exactly.

Usually mortgage brokers will suggest that all customers on the lender’s variable rate mortgages should review their mortgage and think about switching to another product, or lender. It is usually not reduced in any way and is at risk of increasing with every rate change. Some time this type of product is looked at as the lender’s way of making money. They are typically no frills, no reductions and a sign that you should be reviewing your mortgage. If this is what you have currently got, then it is well high time that you decided to compare today’s mortgage rates and find yourself a brand new mortgage.

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