Fixed Rate Mortgages
When a borrower opts for a fixed rate mortgage arrangement, the interest rate is fixed for a pre-determined period of time. This rate stayed the same for an agreed period of time. 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 benefit of a fixed rate deal is that they know exactly how much their fixed monthly repayment are going to be each month and for how long the payments will remain the same. Please note all fixed rate products come with an early repayment charge. Meaning if you try to pay the total loan off or more than 10% of your loan within the fixed rate period a charge will be applied by the lender.
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. An arrangement fee to set up a fixed term mortgage might apply.
Usually, once a fixed rate arrangement comes to an end, the lender’s standard variable rate applies. At this stage, borrowers may wish to explore other mortgage rates.