Fixed rate mortgages

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What is a fixed rate mortgage?

A fixed rate mortgage does exactly what it says. The amount of interest you pay is fixed for the period agreed with the mortgage lender, which means that your monthly repayments will be the same during this time.

Why choose a fixed rate deal?

The fixed rate mortgage is especially popular with UK buyers because of the security it gives the borrower. A fixed rate mortgage is guaranteed to remain at the same level for as long as is specified in the mortgage offer. That means that your payments will stay the same for the initial period.

For this reason, they're ideal for budgeting and so fixed rates tend to be particularly popular among first time buyers. They're also seen as a particularly attractive product to choose if it's looking like interest rates are going to go up - and so, in more uncertain times, fixed rate mortgages also prove very popular with people looking to remortgage.

How long will my fixed rate mortgage last for?

It's up to you. Your fixed rate mortgage will last for the period agreed with the lender. People often choose between two and five years, but a fixed rate mortgage of up to 25 years can be available.

What happens after the initial fixed rate mortgage has ended?

Typically, at the end of your agreed period, your mortgage is transferred to your lender's standard variable rate. This may not be such a favourable rate, however, often you will be able to renegotiate your mortgage with your current lender, or let us shop around for you, to see if there are any better deals on the market.

What else do I need to know about fixed rate deals?

If interest rates come down during the initial fixed period, you won't reap the benefits. You may also face financial penalties if you want to change mortgages or pay off your loan in full.

An important feature to look out for with some fixed rate mortgage deals, is the early repayment charge 'with overhang' : this is where the lender will continue to charge early repayment charges for a period of time after the initial fixed deal has ended. Normally this will mean that you will be tied in to a variable rate, that no-one can predict with any accuracy. Deals which allow you to switch product, or lender, after the fixed period ends, tend to be more popular, as they don't have the same element of uncertainty.