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April 12, 2010


Mortage rates and crsytal balls for 2010

By admin in Candidate guides

Mortgages… love them or hate them; you’re likely to have a mortgage at some stage of your life. If you haven’t had a mortgage yet though you’re proberly wondering what all the fuss is about. If you fall into that bracket of “mortgage noobie” this blog post is for you.

Getting the right mortgage means:
- more money in your pocket
- less stress and worry
- less fee’s or no fee’s on completion
- less fee’s or no fee’s for changing product

The problem is that there are so many mortgage products out there, that by the time you have found your house that you want to buy you can be so confused that you don’t know which option is the right one to opt for, or what package.

The most common mortgages you will come across are Fixed rate and Floating rate - Although many people say that to get the right mortgage you need a crystal ball!

Fixed rate mortgages : If you opt for a fixed rate mortgage you are effectively “locking” in a rate that you sign in for. This means that if you manage to get a low rate and mortgage rates rise then you still get to keep the low rate you took! However if mortgage rates drop, you would then be paying more than your neighbours for the same type of property.

Floating mortgages : Taking a floating rate mortgage can be a gamble, effectively you are betting that the rate will remain in your monthly budget or drop to a lower percentile. Currently floating mortgage rates are around 5.59 /5.69 depending on product, so if mortgage rates were to become lower in the future your payments would also become lower. As interest charges make up the largest proportion of most payments taking on a floating mortgage in a favourable climate can mean very low repayments.

You may be able to see now why having a crystal ball would be so helpful when choosing a mortgage! Getting locked into a repayment schedule that you didn’t predict or finding that rising mortgage rates squeeze you to the point of the brink of no return is of course not enjoyable.

As a Mortgage noobie you need to carefully work out what you can afford and leave yourself plenty of breathing space. If you go back to mortgage rates from 2008 they were around 8-10% which is a massive increase from the 5% rates we are on right now.

Before you go house hunting check first to see what you can afford, review the jobs on the internet to see if you are being paid the right amount for your skills, and get yourself a free appointment with a mortgage broker.