Fixed Rate Mortgages

Both standard fixed rate mortgages and buy to let fixed rate mortgages are ideal for home buyers and property investors who want to both stay in control of interest payments and plan their finances carefully.

What are Fixed Rate Mortgages?

When repaying money owed from a mortgage, the amount of interest to be paid will usually fluctuate based on the Bank of England base rate, or the mortgage lender’s standard variable rate. With a fixed rate mortgage, however, the interest rate remains the same throughout the fixed rate period, regardless of any interest rate activity. This means that mortgage repayments are guaranteed to remain the same every month during this set period, which is excellent news if interest rates rise: this would normally mean higher mortgage payments. The flip-side of this is that taking out long term fixed rate mortgages during periods in which mortgage rates fall means mortgage holders pay more interest on their loans than they would do if they had standard variable rate mortgages.

Short Term Fixed Rate Mortgages

A fixed rate mortgage is for an initial term, usually lasting between two to five years. A 2 year fixed rate mortgage is generally the shortest available term, but is well suited to those looking to move house in the next few years. Recent cuts in interest rates mean 2 year fixed rate mortgages and 3 year fixed rate mortgages are generally the cheapest fixed rate mortgages, making them a better option for people who are in need of a short term loan. A 3 year fixed rate mortgage will similarly suit homebuyers looking to move house shortly, but they will incur additional mortgage fees if they decide to stay in their current property.

Medium Term Fixed Rate Mortgages

5 year fixed rate mortgages are favoured by financial experts as they not only provide stability due to the medium term fixed period, but also there is no need for remortgaging within a short period of time which can mean sizeable additional costs, primarily from mortgage fees.

Long Term Fixed Rate Mortgages

Borrowers will be granted longer term security still by taking out 10 year fixed rate mortgages. These long term deals offer peace of mind, though ten years is a long term financial commitment so careful consideration should be given as to whether such a long term fixed rate mortgage is the best choice.

When searching for cheap fixed rate mortgage deals for a 5 year fixed rate mortgage or a 10 year fixed rate mortgage, homeowners should check that they are portable so the mortgage can go with them if they move house.

Ending Fixed Rate Mortgage Deals

When the fixed rate period comes to an end, the lender will typically transfer the mortgage onto its own variable rate. This could mean that repayments will take a sudden rise depending on the interest rate. However, it is possible to arrange a new mortgage deal with your existing lender, or to remortgage to a different provider (either directly or via a mortgage broker); indeed remortgaging is often the best option for holders of expiring fixed rate mortgages.

Fixed Rate Mortgage Calculators

A fixed rate mortgage calculator is a good starting point to assess the affordability of such a mortgage, and the borrower can compare fixed rate mortgages online to find the best deals with various lenders. The best fixed rate mortgages are generally reserved for those customers with big deposits, but reduced rates for those starting on the property ladder are becoming more common.