First time buyers 'should' consider suitability of fixed-rate mortgages

13-Oct-2006

First time buyers should evaluate the suitability of the latest range of fixed-rate mortgages, experts suggest.

Despite recent data suggesting that first time buyers are finding it increasingly hard to get on the property ladder, it would appear that the stability offered by a fixed-rate mortgage deal is still less attractive than a variable-rate option.

According to data by Moneyfacts, although around 92 per cent of all mortgages taken out this year have been fixed-rate, only around 20 per cent of providers offer fixed-rate terms of ten years or more.

"Fixing your rate over such a long period of time can be considered a gamble [and] a lot can happen within the economy … over this time," said Julia Harris from Moneyfacts.

"While it is unlikely the economy can sustain lower rates for the longer term, macroeconomic influences … could paint a different picture in the long-term," she added.

Although a fixed-rate package may provide a significant degree of stability, this must be offset against your likelihood of redeeming the mortgage during the fixed-rate period; early redemption penalty fees are usually levied throughout the fixed-rate term.

Moneyfacts is a financial comparison website, offering advice on a range of financial products, including mortgages, current accounts and credit cards.

For advice on first time buyer mortgages, or to find out how much you can borrow and how much it would cost you, contact a good mortgage broker.

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