==== ====Best Mortgage Rates In Scottsdale Arizonahttp://www.galemortgage.com==== ====The choice of whether a fixed rate, ...
Rate (SVR). This takes the form of a reduction in the normal variable interest rate by say, 1.5% fora year or two. Assumin...
restrictions.DisadvantagesThe mortgage payment will go up if the Bank of England increases the base rate. As with mostothe...
If the Bank of England base rate falls resulting in a fall in the lenders standard variable rate belowthe level of the cap...
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Home Loan types in Scottsdale Arizona

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There are many different types of mortgage programs out there to get a home loan in Scottsdale
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Home Loan types in Scottsdale Arizona

  1. 1. ==== ====Best Mortgage Rates In Scottsdale Arizonahttp://www.galemortgage.com==== ====The choice of whether a fixed rate, variable, discounted, capped or tracker rate mortgage is moreappropriate to your needs, will take careful consideration. The article that follows provides abreakdown of the individual rates with their advantages and disadvantages as based on yourattitude to risk, not all types of mortgage will be suitable.When considering which type of mortgage product is suitable for your needs, it pays to consideryour attitude to risk, as those with a cautious attitude to risk may find a fixed or capped rate moreappropriate, whereas those with a more adventurous attitude to risk may find a tracker rate thatfluctuates up and down more appealing.Following is a description of the different mortgage rate options along with a summary of the mainadvantages and disadvantages for each option.Fixed Rate MortgagesWith a fixed rate mortgage you can lock into a fixed repayment cost that will not fluctuate up ordown with movements in the Bank of England base rate, or the lenders Standard Variable Rate.The most popular fixed rate mortgages are 2, 3 and 5 year fixed rates, but fixed rates of between10 years and 30 years are now more common at reasonable rates. As a general rule of thumb, thelonger the fixed rate period the higher the interest rate. Similarly lower fixed rates are applicablewhen the loan to value falls below 75% whereas mortgages arranged for 85% or 90% of theproperty value will incur a much higher mortgage rate.AdvantagesHaving the peace of mind that your mortgage payment will not rise with increases in the base rate.This makes budgeting easier for the fixed rate period selected, and can be advantageous to firsttime buyers or those stretching themselves to the maximum affordable payment.DisadvantagesThe monthly repayment will remain the same even when the economic environment sees theBank of England and lenders reducing their base rates. In these circumstances where the fixedrate ends up costing more, remembering why the initial decision was made to select a fixed rate,can be helpful.Discount Rate MortgagesWith a discount rate mortgage, you are offered a percentage off of the lenders Standard Variable
  2. 2. Rate (SVR). This takes the form of a reduction in the normal variable interest rate by say, 1.5% fora year or two. Assuming that the higher the level of discount offered the better the deal is acommon mistake of those considering a discount rate. The key bit of information missing however,is what the lenders SVR is, as this will dictate the actual pay rate after the discount is applied.As with a fixed rate, the longer the discount rate period the smaller the discount offered, and thehigher the rate. Shorter periods such as 2 years will attract the highest levels of discount. Inaddition when considering the amount to be borrowed, the increased risk to the lender of providinga 90% loan will be reflected in the pay rate, with lower borrowing amounts attracting morecompetitive rates.AdvantagesShould the lender reduce their standard variable rate your interest rate and monthly payment willalso reduce.DisadvantagesWhen the lender or Bank of England increases their base rate, your mortgage payment will alsoincrease. However in some circumstances lenders do not always pass on the full amount of aBank of England base rate reduction.Affordability of the mortgage at the end of the discount rate period should be considered at outset.There are no guarantees that follow on rates will be available, and so you should make certain thatyou are able to afford the monthly payment at the lenders standard variable applicable upon expiryof the discount rate period. Allowing for an increase in interest rates above the SVR would beprudent to avoid a Payment shock.Tracker Rate MortgagesTracker rate mortgages guarantee to follow the Bank of England base rate when it moves up ordown. Tracker rates are expressed as a percentage above or below the Bank of England baserate such at +0.5% over BOE base rate for 2 years.The most popular tracker rate mortgages have been 2 and 3 year products, but there is now anincreasing demand for lifetime tracker rates as borrowers are starting to realise that the Bank ofEngland base rate has been reasonable competitive, and having a mortgage product linked to itcould be beneficial in the long term.AdvantagesA tracker rate guarantees to follow the Bank of England base rate for however long the trackerrate is set up for. This means a tracker rate mortgage payment reduces in line with reductions tothe base rate by the Bank of England.The overall cost calculation of a Lifetime tracker rate can be significantly lower than taking shorterterm mortgage products with the ongoing costs of remortgaging such as valuation fees, legal feeand lender arrangement fees. Lifetime tracker rates often have no early repayment penalty
  3. 3. restrictions.DisadvantagesThe mortgage payment will go up if the Bank of England increases the base rate. As with mostother types of mortgage, early redemption penalties will apply for some or all of the tracker rateperiod and are typically 5% of the loan or six months interest.Variable Rate MortgagesVariable rate mortgages are more commonly known as the lenders Standard Variable Rate (SVR),and are the rate that you come onto after the expiry of a fixed, discounted, tracker or capped ratemortgage. A variable rate is similar to a tracker rate in as much as the lender will base their SVRon the Bank of England base rate plus a loading of between say 2.5% and 3.5%. That is where thesimilarity ends however.AdvantagesThe main advantage of being on the lenders Standard Variable Rate (SVR) is that there will be noearly repayment charge for redeeming the loan in full. When there is uncertainty about ratemovements in the financial markets, this can provide a degree of certainty and flexibility. For thosewishing to fix their mortgage rate, an SVR with no early repayment charge can provide thebreathing space required to just wait and see before committing.Historically not all lenders have chosen to pass on through their standard variable rates,reductions made by the Bank of England. This situation is changing and those with SVRmortgages benefit from a reduced payment.DisadvantagesGenerally the SVR will be a higher rate of interest and so your mortgage payment will be greaterthan if you were on a tracker rate, fixed rate or discounted rate mortgage product. Additionally andin comparison to other types of mortgage, a higher monthly payment can result when lenders donot pass on any or all of a reduction in the Bank of England base rate which has not beenuncommon in the past.Capped Rate MortgagesThe capped rate is a variable rate mortgage which has a fixed limit to how far the interest rate canincrease (the cap), and provides the option to know the maximum level of mortgage payment fromoutset. For those who are risk adverse, but who wish to have the certainty of payment as well asbenefit from interest rate reductions, the Capped rate mortgage offers the best of both worlds. Forexample if the cap is set at 6% and the banks rates go below this rate, then your repayments willgo down to reflect the reduction, with the guarantee that should rates go above the 6%, yourpayments will remain based on the maximum 6% because of the cap.Advantages
  4. 4. If the Bank of England base rate falls resulting in a fall in the lenders standard variable rate belowthe level of the capped rate, then your monthly repayment will reduce. For many this provides thepeace of mind and certainty for ease of budgeting offered by a know maximum monthly payment.DisadvantagesBecause a capped rate offers the best of both worlds to the borrower, the capped rate is usuallyuncompetitive as lenders need to price in the risk of rate reductions, leaving those such as firsttime buyers or those stretching their affordability, exposed to a higher rate than would be availablewith a fixed rate. This means that competitive capped rates are seldom available with UK lenderswho prefer to offer fixed rates instead.To review and compare Mortgage Rates and Equity Release Schemes from the leading banks andbuilding societies Jerry Figueroa-Lee recommends you visit The Mortgage Warehouse. Pleaseremember to carefully read the Initial Disclosure Document and terms of service before you applyfor a mortgage online.Article Source:http://EzineArticles.com/?expert=Jerry_Figueroa_Lee==== ====Best Mortgage Rates In Scottsdale Arizonahttp://www.galemortgage.com==== ====

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