This type of mortgage offers certain benefits to a fixed cost over a certain period of time. This type of mortgage gives shelter from rising rates and can be an excellent financial tool in allowing its customer to “budget” for a certain period of time.

The downsides to this type of mortgage is during the fixed period there will almost certainly be early repayment charges if the customer wishes to come out of the agreement within the fixed term. Secondly in a market where the rates are decreasing then the customer can be left paying a higher monthly payment than that of someone on a variable rate.

For this type of mortgage there almost certainly is an “arrangement fee” charged by the lender.

 

 

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Rainbow is a trading style of Havering Financial Consultancy who is an appointed representative of Intrinsic Financial Planning Limited which is authorised and regulated by the Financial Services Authority.