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Fixed-Rate Mortgage
A fixed-rate mortgage fixes your monthly mortgage repayments for the length of the deal.
A fixed-rate mortgage gives you a special interest rate for a fixed period of time,
meaning your monthly repayments will stay the same until the fix ends.
meaning your monthly repayments will stay the same until the fix ends.
What Is a Fixed-Rate Mortgage?
A fixed rate mortgage is a mortgage that has a fixed interest rate for an agreed term of the mortgage, meaning that the interest rate won’t change for the agreed term. The fixed periods are typically between 2 and 10 years and are generally more popular with people who would like to know what their monthly repayments would be for a certain period.
Fixed rate mortgages carry the same interest rate for the stipulated period of the mortgage.
Fixed rate mortgages monthly payments do not fluctuate with market conditions.
Advantages of Fixed-Rate Mortgage
- Interest rates and monthly payments remain the same through the stipulated fixed period of the Fixed rate, regardless of what happens to the bank of England’s base rates, typically reverting to a lenders standard variable rate thereafter.
- Knowing exactly what your mortgage payments will be every month offers both security and peace of mind, especially for the new home owner or for landlords knowing the exact cost of the mortgage brings financial security that you don’t get with variable rate mortgages.
Disadvantages of Fixed-Rate Mortgage
- If interest rates go down, you could be paying more as opposed to variable or tracker rate mortgage.
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