Fixed or Variable Rate Mortgages?
Fixed or Variable Rate Mortgages, which is the best option? In truth that’s only a question you can answer with the power of hindsight, as really you are gambling. Yes that’s right you are gambling on what you think the interest rates will do.
For example if you think that they will go up over the next few years then it would be best to take a fixed rate mortgage at the lower interest rates. Conversely if you believe they would go down over the coming years then you could take a chance on a variable mortgage.
Currently UK interest rates are 4.75% but there are strong rumours that over the next year or two they will be cut, with a cut predicted in August 2005. So now would seem like a good time to take a variable rate mortgage BUT you must consider the long term future and how long your mortgage deal will be.
Obviously no one can predict the future, so what do? If you have ample income and you believe the rates will drop, or you only have a very small mortgage then you might perhaps consider and variable rate. Myself I prefer the assurance of knowing exactly what I will be paying month on month. This seems to be the prudent and sensible approach to me, especially if you are working to a tight budget.