Fixed Rate Mortgages

What is a Fixed Rate Mortgage?
As you would expect, with a fixed rate mortgage the mortgage rate is fixed for a set period of time, so no matter what movements occur in the lender's standard variable mortgage rate, the borrower's arrangement is fixed and, therefore, so are the monthly fixed rate mortgage payments. A fixed rate mortgage would suit someone who likes to know where they stand.

How does a Fixed Rate Mortgage work?
With a fixed rate mortgage If the standard variable mortgage rate falls below the fixed rate, then you pay more than you would on a variable rate mortgage. But if the standard variable mortgage rate rises above the fixed rate then you end up paying less than you would on a variable rate mortgage.

Although a fixed rate mortgage gives comfort during its term, the borrower has to be aware that when it ends, like all other schemes, the borrower reverts to the standard variable mortgage rate. Sometimes there are extended early repayment charges (which bind the borrower to stay on the variable mortgage rate for a period of time after the fixed rate ends). This can prove to be a shock if interest rates have risen dramatically over the fixed rate period.