An explanation of fixed rate remortgages

There are a number of different types of mortgage and remortgage products available, each offering features that may or may not appeal to you. While there may appear to be just a basic choice between variable and fixed rate remortgages, there may in fact be a number of different products available:

·        if you find the prospect of having a variable rate remortgage, where your monthly repayment may change from month to month, to be a bit daunting, then fixed rate remortgages may be what you are looking for;

·        what basically happens is that typically your monthly remortgage repayment is calculated using a fixed rate over the base bank rate; 

·        typically you may find that a fixed rate remortgage may allow you to budget more accurately on a monthly basis, knowing that your mortgage payment is fixed;

·        the fixed rate though, may not be available to you over the full term of your re mortgage;

·        typically these offers may last a couple of years or perhaps a bit longer, after which time you may find that you are automatically switched over to a standard variable rate deal;

·        with a variable rate deal, the rate you pay is set to be a pre-set amount above the prevailing bank rate, which may change on a monthly basis, so you may expect your monthly instalments to change too;

·        the good news is though, that interest rates can go down as well as up, so you may see your monthly repayment decrease from time to time;

·        the actual deal you may obtain with remortgages, may depend upon the amount you wish to borrow, the length of time (the term) you wish to borrow the money for, your reasons for remortgaging (eg equity release or reducing monthly commitments) and how big the loan is when compared to the value of the property – called the loan to value ratio;

·        getting quotes for a few fixed rate remortgages may help you select the product that best suits your purposes and there are internet sites where you may typically review the details of what’s available from a number of lenders;

·        you may obviously wish to remember to take all of the arrangement fees and valuation costs into account when doing your sums to determine the most suitable deal for you;

·        one final point to consider when arranging fixed rate remortgages or any other remortgage for that matter, is that your existing mortgage arrangement may have a penalty clause  for early repayment and this too may have to be factored into any calculations you are carrying out.

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