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andygrif · 20-05-2004, 11:06

The difference is that the rate of interest is not fixed for the course of the loan. Over there, and in quite a few other places in Europe - if you borrow money over 25 years at 3% then you pay the 3% interest for the whole of the 25 years.

Here, if the Bank of Englang puts the interest rates up then it's likely your mortage interest rates will go up too. There are some lenders that offer fixed rates, but normally only for a finite period, like 2/3 years, and usually this means that you will pay slightly more than the current variable mortage interest rate for the privalege.

A few now offer ten year fixed, but there is some talk now of introducing a fixed rate for the full term like you have there. That way people will not be caught out (as happened in the late 80's) by sky-rocketing interest rates (I seem to remember that 15% was the highest back then) and not being able to afford their mortgage payments - thus losing their homes.

20-05-2004, 11:06	#3
andygrif Inactive Join Date: Jul 2003 Posts: 2,820	Re: Mortgages The difference is that the rate of interest is not fixed for the course of the loan. Over there, and in quite a few other places in Europe - if you borrow money over 25 years at 3% then you pay the 3% interest for the whole of the 25 years. Here, if the Bank of Englang puts the interest rates up then it's likely your mortage interest rates will go up too. There are some lenders that offer fixed rates, but normally only for a finite period, like 2/3 years, and usually this means that you will pay slightly more than the current variable mortage interest rate for the privalege. A few now offer ten year fixed, but there is some talk now of introducing a fixed rate for the full term like you have there. That way people will not be caught out (as happened in the late 80's) by sky-rocketing interest rates (I seem to remember that 15% was the highest back then) and not being able to afford their mortgage payments - thus losing their homes.