10 Year Fixed Mortgage Rates

Why Fixed Rate Mortgages are Ideal for First Time Buyers

Buying a house is not an easy task and the process is made even more difficult because the buyer also has to find the perfect mortgage to pay for the purchase. For the uninitiated first time buyer, understanding various mortgage loan options and identifying the ones that will suit his needs can be time and effort consuming. There are a number of fixed and variable rate options in the market and both have their own advantages. However, for a first time buyer, fixed term loans are the best suited.

Easy to understand loans

Fixed rate mortgages are simpler to understand than variable rate ones. As the name suggests, fixed rate mortgages come with a pre determined rate of interest that remains unchanged even if market interest rates change. In effect, your interest rates are insulated against market fluctuations.

It is important for you to know that this fixed interest period lasts for a specified number of years during the initial term of the loan. Beyond this point the rate may switch to the SVR (standard variable rate) of the lender. Your lender’s SVR need not necessarily be the same as the base rate. For instance, your lender can set his rates at base rate +1% or however else he chooses.

Easy to budget for

Unlike a variable rate loan, the rate of interest you will be paying over the initial fixed rate period is clearly known to you right at the time when you take the loan. For example, your 10 year fixed mortgage rates may be set at 4% for the first two years. At the end of two years, the rate switches to the lender’s SVR of 4.2%.

As you know how much you need to set aside to pay for your loan each month, it is easy to budget for this sum well in advance. Many first time buyers set aside a portion of their pay check into a separate mortgage repayment account on payday. This is a good way to ensure that you never run out of cash when its time for the mortgage installment to be paid. It is also easier to keep track of your repayments in this way.

Smaller installments are easier to manage

If you are just starting out in your career and want to invest in your first home, then fixed rate mortgages offer some special advantages. As the total loan amount is spread over many installments, the monthly payments are easily manageable. As you progress in your career and your salary increases in the future, you can opt for a remortgage if 10 year fixed mortgage rates are attractive.

The shorter loan duration means larger installments but at this stage in life you may be easily able to meet expenses of this magnitude. The shorter term also allows you to become debt free quicker. By shopping for the best 10 year fixed mortgage rates in the market at this stage you can ensure that your costs are kept to the minimum.

Unlike with variable rate loans, there is no need to constantly monitor the prevailing rates in the economy or keep a constant check on your lender’s SVR when you opt for a fixed rate mortgage. For a first time buyer who is still quite unfamiliar with interest rate movements and factors that impact these rates, fixed rate mortgages are the best suited options.

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