A fixed rate mortgage is a type of mortgage where the interest rate on your mortgage stays the same during the fixed deal period – e.g. a 5-year fixed rate.
How does a fixed rate mortgage work?
A fixed rate mortgage allows you to keep the same interest rate for a certain amount of time. This means that you’ll know exactly how much you’re putting towards your mortgage each month.
This is not the same as other types of mortgages, such as a tracker mortgage, where your interest rate can go up or down if the Bank of England Base Rate changes.
What happens when your fixed rate ends?
If you haven’t locked yourself into a new mortgage deal by the time your fixed rate ends, you will automatically revert onto your lenders Standard Variable Rate (SVR).
SVR could change with any movements in the lender’s variable rate and could go up or down.SVR mortgages could be, so it could be worth speaking to one of our mortgage advisers to secure a new deal for you.
Advantages of fixed rate mortgages:
- If interest rates increase, you can relax knowing that your monthly payments will not increase during your fixed deal period.
- You will know exactly what your monthly repayments, making it easier to budget.
- You can choose between short and long fixed rate deals to suit your individual circumstances.
Disadvantages of fixed rate mortgages:
- If interest rates go down, you won’t be able to take advantage of a cheaper deal elsewhere.
- If you wanted to exit from your fixed deal, you will incur early repayment charges, which can be rather costly if you are in the early stages of your fixed deal period.
Here at Mortgagez, our team of fully qualified mortgage advisers are on hand to help you every step of the way in obtaining a new mortgage and our service won’t cost you a penny when you go via our online portal.
Visit our website today and obtain a quick quote to see how much you could save on your next mortgage.
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PLEASE NOTE: Article written 9th February 2023. Information contained within this article is likely to change and therefore should not be relied upon or form part of any form of decision making without seeking professional advice. *
YOUR HOME MAY BE REPOSSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages.
Article written: February 2023 090223 MZ000266
