Variable home mortgage rates, what is the risk?

Variable home mortgage rates, what is the risk?
One of the choices you are going to have to make when buying a house on credit is to decide what kind of home mortgage you are going to choose. This choice is one of many you should make before signing any purchase agreement. You will need to decide:
1) If you can afford to buy a house.
This is as basic and as important as it gets. No matter how well you do finding a good bargain and an excellent mortgage it will be a considerable expenditure every month. If you fail to pay you will lose all your investment and your house besides giving a heavy blow to your credit rating and with that affect your chances of getting finance in the future.
2) How much you can afford?
Again, independently of how well you do on the mortgage your monthly payments will depend on the price of your house and the length of the mortgage. Your decisions can cost you your financial future.
3) What mortgage type should I get?
This is an important question than involves your answer to various questions. For instance: A) Are you going to keep your house for the long term, or are you planning to sell after a few years? B) Maybe you are planning to buy to let. C) On the other hand you might be planning to live in that house for the foreseeable future. D) What kind of income do you have? Is it regular or depending on seasonal changes?
Your personal situation will affect your choice of mortgage type. Why is that? And what is the risk of choosing a variable rate home mortgage?
If you are planning to buy to sell in the short term it is probably better to get a variable rate mortgage. These mortgages are generally cheaper, i.e. with a lower interest rate. This is because variable interest rate does not present so much of a risk to the borrower. Fixed mortgages on the other hand will stay the same even though interest rates might rise well above the fixed rate. However in the short term variable interest is very likely to be cheaper.
However if you are planning to buy to let or live in it for the long term and you have a fixed income, it might be a good idea to get a fixed interest mortgage. These mortgages don’t change throughout the life of the loan. What you pay in month one is what you will pay for the last month of your loan. If you buy to let you could decide that the extra interest rate of a fixed mortgage is worth the security of knowing your monthly payments and can also be included in the cost of making business for your rental income.
The risk with taking on a variable rate mortgage is that the market changes dramatically and you end up with monthly payments you can’t afford. When this happens house sales often drop also. This could cause you to have a house you can’t pay for and can’t afford. You could risk losing everything. Which option is best depends on your personal circumstances and unforeseen occurrence.