Fixed Rate
A fixed rate mortgage is where your interest payments are fixed at a specified level for specified period of time and means that you will pay the same amount of interest for a specified term (usually between one and five years). This allows you to budget more effectively at the start of your mortgage.
Who should consider a Fixed Rate Mortgage
A Fixed Rate mortgage will inevitably be much more suited to some borrowers than others and like most mortgage choices it comes down to personal circumstances and preference.
Repayment Certainty Vs Base Rate Fall Payment Reduction
If a borrower wants absolute certainty of the maximum amount they will have to repay on a monthly basis and is not concerned that they may miss out on a base rate fall then the Fixed Rate mortgage will offer a good option. If they are also quite content to sit out their agreement for the time period without the need or desire to change mortgage lender then it will provide them with a good mortgage. Many borrowers don’t want the disruption of searching out new mortgage deals on a regular basis and are quite content to know that they are fixed to a rate that they know they can afford for the duration of the mortgage.
Most Lenders Offer Competitive Fixed Rate Products
The rates available to borrowers looking to fix their rate are usually competitive and the range of lenders offering a Fixed Rate mortgage is large. That leads to competition and that of course helps to keep the offerings competitive.
Investigate All Charges And Fees
Any borrower thinking of taking out a Fixed Rate mortgage should fully investigate the fees and penalty clauses attached to the mortgage before they commit but as long as they are fully aware of what they are agreeing to are a secure option. For the period of the mortgage agreement the rate that they pay will not rise and that’s enough to make a lot of borrowers feel secure.
Interest Rates Cant Be Guaranteed
If as a borrower you feel very strongly that the interest rate is due to rise and is very unlikely to fall fixing your mortgage rate will protect you. That judgement relies on personal ‘gut instinct’ and can’t be guaranteed but for some borrowers it is the kind of strong feeling that they can’t ignore. Equally, if a borrower has listened to press coverage and market rumours that suggest the rate might fall they may feel uncomfortable in fixing to a rate.
