Posts Tagged ‘10 year fixed mortgage rates’

10 Year Fixed Mortgage Rates

Tuesday, February 1st, 2011

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%.