Fixed rate mortgages are a popular type of mortgage deal, particularly in periods where there is uncertainty over whether bank interest rates might increase in the short to medium term. When you take out this type of mortgage the interest rate is fixed for an agreed term, usually between one and five years. This means that, unless you make other changes to your mortgage such as making a part repayment, borrowing more money or taking a payment holiday, your monthly payment is fixed for the term of the deal.
Lenders often price fixed rate mortgages slightly higher than variable or tracker rates, and if variable rates drop within the term of your product, you won’t get the benefit. However, fixed rates are a good option for people who want the stability of knowing their monthly payments won’t change until the fixed period comes to an end.
Many fixed rates tie you to the mortgage product for the term of the deal, which means if you want to repay your mortgage or come out of the fixed rate early an Early Repayment Charge will apply.
Just Mortgage Brokers can help you decide whether a fixed rate mortgage is right for you, and can advise on all types of mortgages, including help to buy mortgages under the government’s affordable housing initiative.