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Should You Stick With New Fixed Rate Mortgage Deals Or Switch To Variable Rate?

Are you stuck with a fixed rate mortgage, wishing you could be one of the ones with a variable rate? Are you considering switching your mortgage before your repayments are finished because the variable rate is currently low?

Traditionally base rates of interest will fluctuate, while those with a fixed rate deal will have to pay the same rates every month. When base rates of interest are low, it means that the monthly repayments will be low too. Many people stuck with long term fixed rate mortgage deals they wish they could switch, when they see that the current interest rate is a lot lower than what they are paying on their fixed rate mortgage. But is it worth it?

The truth is, that switching from new fixed rate mortgage deals to variable rate mortgage deals is not likely to save you any money. Those who currently hold variable rate mortgages will benefit from the low rate, but those who are switching to it will normally get a higher priced deal as a new customer. Also, you would be charged a large penalty fee for exiting your current mortgage deal.

Although the variable rate currently seems cheap, to make switching your deal worth it, you would have to be borrowing no more than 75% of your property's value, have a low penalty or no penalty for exiting your mortgage early and have more than a few months left on your mortgage. It is surprisingly hard to make a cut in rate worth switching for. Waiting for your mortgage deal to end before switching is the best option.

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