Fixed Rate Mortgage

What is a fixed rate mortgage?

A fixed rate mortgage is just like any other repayment mortgage or interest only mortgage. The main difference is that unlike a variable rate mortgage (where payments rise and fall in line with the government interest rates), a fixed rate mortgage will be exactly that: fixed for a certain period.

Worried about increasing costs?
The advantage of this type of loan is that you know exactly how much it will cost each month, and for how long. If interest rates rise, your costs will not. On the flip side, however, is the problem that when mortgage rates drop, your payments will not drop with them. However, most people, especially first time buyers find it a significant load off their mind to have their costs known for a period.

There are many fixed rate mortgage deals available. Terms can vary from a few months with an introductory offer, to 2,3 or 5 years (or even longer). As a loose rule of thumb with , the longer the rate is secured, the higher the rate will be. You should also expect to be tied in with the mortgage lender, for at least until the end of the fixed rate period.

Click here to get advice on a fixed rate mortgage from an independent financial adviser.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.