How to Get the Best Fixed Rate Mortgage Deal
Home Mortgage Financing to Reduce Monthly Repayments
Oct 21, 2009
The best fixed rate mortgage deal can substantially reduce home mortgage payments. The longer the term, the higher the rate of interest will be. This is because lenders need to factor-in the potential for fluctuations when making their calculations. As well as reducing the cumulative interest paid, a 15-year mortgage will charge lower interest rates than a loan over 30 or 40 years.
The Best Fixed Rate Mortgage Deals
Fixing the rate of interest for a defined term provides genuine peace-of-mind for the borrower. A low fixed rate mortgage is particularly useful for those who cannot easily increase their earnings through bonuses and/or over-time when base rates do eventually start to increase. Whilst the rate may currently be higher than on an adjustable-rate mortgage (ARM), money will be saved over the entire duration of the loan.
FICO Credit Score
The key to approval for the best fixed rate mortgage deal is a high credit score. A reliable repayment history tells the lender that the borrower represents a low risk. It is important to get hold of a free credit report to check that the data held is accurate. Should there be any inaccuracies, get these corrected through the credit reference agency a minimum of six months before applying for credit.
House Deposit
The cheapest fixed rate mortgages will be available to those who are able to offer upwards of a 20% deposit. This is because it protects the lender against negative equity and gives them scope to recover their capital in the event of foreclosure. Whilst liquidity is returning, there still aren't many lenders that are prepared to offer their most competitive deals to borrowers who provide a small deposit.
Proven Affordability
The banks have come under considerable scrutiny because they have lent money to individuals who blatantly cannot afford the home mortgage payments. A careful assessment of income and expenditure will be made before a lending decision is made. The best fixed rate mortgage deals will be offered to those who have a sustainable debt-to-income ratio- too much debt will set off a red light.
Stable History of Employment
A reliable employment history will be viewed positively. It can be very difficult for someone to receive approval when they are still in their probationary period or are self-employed and lack three years of accounts.This is because those who have held their positions longer are less likely to default.
Even if the borrower doesn't currently meet all of the above criteria, it is possible to achieve them all over time. If already tied-in to a loan, think carefully before signing-up to the best fixed rate mortgage deal. This is because a punitive redemption penalty is likely to apply. Should there be any doubt, ask the existing lender directly or take a copy of the loan agreement to show the potential new lender.
 |
 |
 |
 |
 |
