Archive for 'Interest Rates'
Interest Structures Continued…
Posted on 22. Apr, 2008 by admin.
Here are some more interest rates to take into consideration when you look at getting yourself a mortgage.
Stepped Rate
This means that the rate will change in steps at certain fixed intervals. A stepped rate may either be a fixed or discounted rate.
Advantage: Can sometimes offer very attractive rates.
Disadvantage: It can be difficult to make a comparison with other deals so it is difficult to make a comparison to know if you are getting the best deals.
Standard Variable Rate
This is a variable rate decided by the lender, and if maintained over a period of time, then you may benefit from a very good rate. With a standard variable rate, the interest is usually charged daily, which again saves you money.
Advantage: You have the ability to pay off a lump sum without worrying about penalties for doing so.
Disadvantage: It can cost more if interest rates go up.
Cash Back Deals
This is where you can get a refund on a sum of money on your mortgage. This is either a flat rate or a percentage of the mortgage.
Advantage: Cash back can be used to take care of some or all of the mortgage fees.
Disadvantage: The rates may be variable so payments may go up if the rate rises.
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Interest Rate Structures
Posted on 11. Apr, 2008 by admin.
There are so many types of interest rate structures from fixed rates, to cash back. It can all be quite confusing. So here’s a break-down of what they are and their advantages and disadvantages.
Fixed Rates
As the name suggests the interest of your mortgage stays the same over however long you have the mortgage. The rates are available over different time periods.
Advantages: Knowing what your monthly mortgage bill will be each month.
Disadvantage: If the interest rate falls, you could end up paying more.
Capped Rate
This is where the mortgage is not going to rise above a certain rate within a fixed period of time, but if the rate falls below the capped rate then the rate will be changed.
Advantages: You get the best of both worlds of fixed and variable rates.
Disadvantage: Can be redemption penalties if paid back within a capped period.
Discounted Rates
This is a variable mortgage that is discounted by a certain percentage for a period of time. This time period can be between 1-5yrs.
Advantages: If the interest rate falls then you can take advantages of any reductions.
Disadvantage: If the rate rises, then so do your repayments.