Fixed Rate Mortgage
Fix your Mortgage payments
Your payments can't increase
A fixed rate mortgage provides guaranteed monthly payments at a set rate of interest for a predetermined period of time, usually 2,3,5 or even 10 or more years. If you want the certainty and reassurance of knowing exactly what your monthly outgoings will be each month, then a fixed rate mortgage is likely to be the most suitable type of product for you. Once the fixed time period expires your mortgage repayments usually revert to the mortgage lender's standard variable rate. A fixed rate mortgage is not usually the cheapest option, but it does provide security against market rate increases and during the period of the fixed rate your monthly mortgage instalments will never change. However in a decreasing market you may find that you could be paying too much, and these types of mortgage products usually carry redemption penalties that prevent you from changing until the product rate expires. A fixed rate may be required because of numerous reasons. Maybe you have a regular salary each month, or maybe the media is speculating or indicating that the Bank of England intend to raise rates and you want to provide some financial security. Maybe you plan to have start a family or are saving for something very special. Whatever the reason, a fixed rate mortgage can make sure that your mortgage remains affordable to you for a specific period of time.
Is a fixed rate the cheapest option?
Consider why you might want one
There may be occassions when a fixed rate offers the most attractive interest rate options, though we wouldn't recommend it for that reason alone. A fixed Mortgage offers the opportunity for you to budget more easily as your payments won't change for a specified period, so it's more likely that you'll be advised to arrange this type of Mortgage due to other factors other than cost alone.
Does it protect me from rate increases?
Yes, at least for a while
With a fixed rate you pay the exact amount each month based on an agreed fixed interest rate for a specified period of time.
What if rates are reduced?
Unfortunately that's its downfall
With a fixed rate, once you have started your contract you are committed to the agreed terms, unless your contract has no redemption charges. This means that usually you will not benefit at all should the Bank of England decided to reduce rates during the period of your Mortgage rate period.
Can I overpay my Mortgage?
It's quite a common facility
You will need to check the specific terms your chosen Lender is offering, but many Lenders nowadays do allow a percentage per annum to be paid additionally without charging you any penalty fees, for example 10% of your Mortgage balance annually.
Disclaimer
James Raynor is Authorised and Reulated by the FSA (463141). You may be charged a fee for the processing of your application and this fee and we estimate that this fee will be £195. Your Home is at risk if you do not keep up the repayments of a Mortgage or any other loan secured against it.
