Fixed Rate Mortgages
In a fixed rate mortgage arrangement, the interest rate is fixed for a pre-determined period of time, which can be for up to 5 years or more.
The monthly mortgage payment will not change, no matter whether the Bank of England, or the mortgage provider, raises or reduces their interest rates.
For the borrower, the advantage of a fixed rate deal is that he or she knows exactly how much their monthly repayment is going to be each month and for how long.
For those who like to budget
In some instances, the interest rate charged on a fixed rate mortgage can be higher than the interest rates charged for other types of mortgages. The borrower may also have to pay an arrangement fee to set up a fixed-rate deal.
There is usually an early repayment charge should you choose to pay your mortgage off early.
Usually, once a fixed rate arrangement comes to an end, the lender’s standard variable rate applies.
Think carefully before securing your debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
