Why the wealthy people never choose fixed-rate mortgages?

Rushing to fix their mortgage rates in packs, homeowners are definitely trying many solutions. But the more experienced borrowers coming from the top of the market are sticking with various flexible deals. Recent worldwide studies have shown that 70% to 80% of all the mortgage lending that happened was on a fixed rate.

 

Why is this happening? It is easy to answer. Fixed rates have fallen to a point at which they have lost its value. Dropping to the lowest point in history, borrowers opt to lock them in before the rise of the interest rates. Still, discussing and experiencing various clients, our community can come to a decision that wealthy people never tend to be hooked on fixed rates.

 

Do you want to know why? Firstly, variable rates are considered as cheaper. For example, if a fixed rate is 2.64%, the variable will always compare to somewhere around 2.15%. There is a great deal of competitive variable rates on the market, and I can help you choose the right one. With them being variable, however, banks can increase the rate after the year limit. The second reason why the rich people choose variable rates is because they can’t afford to make a mistake.

 

Yes, the banks can increase the variable rates, but when? No one knows that. With an average record lower than 0,50%, wealthy people can sleep well without having to worry about an increase in the variable rates. Many experts predict a slight increase in 2-3 years time from now. Nonetheless, the wealthy community knows that transferring to a fixed rate can be done at a glance – and usually without any penalties! The decision is not always based on price though. Flexible rates mean flexibility in terms of the financial situations. Paying down large chunks without incurring early repayment charges is very handy, exceeding to many bonuses for them accordingly. Another advantage is repaying the loan in short-term, from which comes the ability to not be locked for a long term.

 

Conclusion For many people, fixed rates provide a little more security. But if interest rates can be predicted as stable, a variable rate can always be worth of your interests.

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