Fixed Rate Mortgage

A fixed-rate mortgage is a type of mortgage where the interest rate remains the same for the entire duration of the loan. This type of mortgage can be beneficial for managing your finances because it provides predictability in your monthly payments.

How does a fixed-rate mortgage work? With a fixed-rate mortgage, you lock in a specific interest rate for a set number of years. This means you will know exactly how much you need to pay towards your mortgage each month.

This is different from other types of mortgages, such as variable rate or tracker mortgages, where the interest rates can fluctuate.

Choosing a fixed-rate mortgage ensures that you won’t encounter any unpleasant surprises in your mortgage statement and gives you greater control over your monthly expenses compared to other types of mortgages.

You can typically choose to fix the rate on your mortgage for a period of two to five years. In some cases, you may be able to secure a fixed rate mortgage for seven to ten years or even longer.

One advantage of a fixed rate mortgage is that your interest rate will remain unaffected by changes in the Bank of England interest rate.

If interest rates increase, your repayments will not rise during the introductory rate period of your mortgage deal. However, if interest rates decrease, it is unlikely that you will be able to find a better deal without incurring an early repayment charge.

What happens when the fixed rate period ends?

If your fixed rate expires and you have not entered into a new mortgage agreement, you will automatically transition to paying a standard variable rate (SVR).

The SVR can fluctuate regularly, either increasing or decreasing. SVR mortgages are typically not the most cost-effective way to repay your mortgage, so it is worth exploring new mortgage deals when this occurs.

There are advantages to a Fixed Rate Mortgage over other mortgages, such as:

• Knowing your monthly repayments in advance can be helpful for managing your finances effectively.
• When considering your future plans, you have the option to select a short or long fixed-term deal.
• Even if interest rates rise, you can rest assured that your rates will remain unchanged.

There are some things to be mindful of with Fixed Rate Mortgages, these include:

• If interest rates decrease, you could potentially be missing out on a more affordable option elsewhere.
• Typically, you cannot terminate a fixed-term agreement without incurring an early repayment charge, which can be expensive if you still have a substantial mortgage balance.
• If your current deal expires and you haven’t explored other options yet, the Standard Variable Rate (SVR) could be an unwelcome surprise for your finances.

Why Best 4U?

As an independent mortgage broker, we are only interested in getting the best deal for our clients! We work with a wide range of lenders and can view the whole of market, with your goals and dreams in mind we can help you to get the deal that is Best 4U!