Fixed Rate Loan
Fixed rate loans are loans where the APR stays at the same rate either for the whole of the loan period or for a shorter period of a year, say. If you think that APR interest levels will drop and stay low then you may feel it more prudent to take out a tracker mortgage which will follow the Bank of England base rate, but if the markets are uncertain a fixed rate loan will stay at the same rate, meaning you know exactly where you stand, exactly how much you have to pay each month, and eliminating uncertainty. There will generally be some sort of quid pro quo with a fixed rate loan, most likely that you will have no flexibility in terms of repayments so will be penalised for early repayment of the loan if you want to pay back more than the terms of the fixed rate loan allow for.
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