Fixed Rate Commercial Mortgages
A fixed rate commercial mortgage is where the lender fixes the interest rate you pay for a period of 1 to 25 years and means that your repayment will not change for that period even if the Bank of England base rate or LIBOR rate was to fluctuate. This type of product is ideal for clients that want to know exactly how much their repayment will be each month.
In this current climate with historically low base rates and talk of two base rate rises this year (analysts are predicting May & November) you might sit more comfortably with a fixed rate commercial mortgage however the downside to fixing the interest rate with majority of the lenders is that they carry redemption penalties.
The lenders will spend a considerable amount of time explaining the pros and cons of the fixed rates with you and this is due to the fact they do not want to have another situation like the PPI scandal.
A Fixed rate commercial mortgage is slightly more expensive than a variable rate, the reason for this being that the cost of funds to the lender are more expensive as they are buying in the funds for a longer period of time.
Here at First Commercial Funding we are finding that a higher percentage of our clients are taking out a fixed rate commercial mortgage over a variable rate due to the uncertainties in the market place with Brexit looming.
If you would like to switch to a fixed rate product or would like a free quotation please don't hesitate to contact us on 01202 937880.