Should you fix your mortgage and bills?
Financial stability for many homeowners in the UK has become increasingly difficult as a result of the interest rate rises that have been enforced by the Bank of England over the past year. Homeowners are having to pay out more in the way of mortgage repayments, which has left them with lower levels of cash to deal with other bills and repayments, and many are struggling hugely to keep up with repayments on their bills and other financial commitments.
Many are now asking themselves whether fixing payments on as many financial commitments as possible could be the answer, as this way they will know exactly how much is being paid out each month and will not have to worry about unexpected rises in outgoings. However, expert warn that consumers should consider carefully whether this is the right option for them, as although it may mean that their repayments are stable it may also mean than they are fixed at a higher than normal rate.
According to one industry official: ‘Having certainty of monthly outgoings is worth its weight in gold, especially for people who are stretching themselves to take out the loan. People have been buying two year fixes, but with arrangement fees and other costs so high, we are now seeing more three and five-year fixes being taken out to avoid paying these fees so regularly.’
Another official spoke about fixed rate mortgages, stating: ‘Fixed rates are going up as lenders factor in possible future base rate rises. Trackers are cheaper, but you have to accept that the rates are likely to go up before coming down, so you have to make sure you can afford higher monthly payments. The rates for three and five-year fixes are quite similar, so the key is to do your homework to get the best deal and make sure you are clear how long you want the fix to last for.’
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