Fixed Rate Self Certification Mortgage
An Argument For A Fixed Rate Self Certification Mortgage
Right now there is a great argument for opting for a fixed rate self certification mortgage. It might not seem it, with the Bank of England looking to drop its interest rates to nearly 0% over the coming year, but fixed can still be the better choice for many. But why? Why should you opt for a fixed rate self certification mortgage when you could get a tracker that could well drop below 1% interest per month by the first quarter of this year? Well, because it is not definite - but with a fixed rate, you know your rate is stuck and you know your rate is secure all the way through the life of your mortgage.
Even if you opt for a tracker rate over a fixed rate self certification mortgage, there is no guarantee that the tracker will follow the base rate down to its potential new lows. Many mortgage lenders are now enacting 'collars' on their deals that prevent them from falling too low. And it's understandable - a lender cannot lend a mortgage at 0%, they would be losing money and that's not good for anyone. With a fixed rate self certification mortgage the lender will lend at that rate regardless of what happens with the Bank's interest rates.
Also, because you have certainty in a fixed rate self certification mortgage, you can plan round your mortgage. If you do not know what you rate is going, as could be the situation with a tracker, how can you be prepared for the future? 2009 needs to be a year where people are well prepared and safeguarded against any more downturns - so a mortgage that has unknowns might not be the best option. If you stick with a fixed rate self certification mortgage, you can plan your life and your business round your rate.
And don't forget, just because a tracker may fall, it doesn't automatically mean it is cheaper than a fixed rate. Even if the base rate falls to 0%, the tracker rate could be 3 or 4 percent above the base rate, so you might still find a cheaper fixed rate self certification mortgage. And although the tracker's movements with the base rate are immediate, fixed rates will come down too, albeit more slowly. Thanks to the cuts the Bank of England set at the end of 2008, many fixed rate self certification mortgage deals will be a bargain right about now.
And there is also the fact that a mortgage is not just a headline rate - just because a fixed rate self certification mortgage does not follow the rate down, it does not mean it won't include some other great facets. Loan to value ratios, fees, penalties, charges, affordability, income ratios - all these factors have to be taken into account if the whole mortgage is to be considered. A tracker moving down with the base rate might seem like the best option right now, but has the tracker got all that the fixed rate self certification mortgage has?
Ultimately, your mortgage adviser is the person who should help you have the final say on the matter. Whether it's a fixed rate self certification mortgage or a tracker, they will be able to look at your circumstances and help you decide. Tracker, variable, discount or fixed rate self certification mortgage - it has to fit round you.
