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What is a fixed rate mortgage?
Find out how a fixed rate mortgage works and how it could help you manage your money.
A fixed rate mortgage is a type of mortgage where the interest rate on your mortgage stays the same, for the duration of your deal.
They can be a useful way to manage your money, as you’ll have a good idea about what you’re going to pay each month.
How does a fixed rate mortgage work?
A fixed rate mortgage allows you to keep the same interest rate for several years. It means you’ll know exactly how much you’re putting towards your mortgage each month.
This is unlike other types of mortgage, such as variable rate or tracker, where interest rates can change regularly.
A fixed rate means there are no nasty surprises in your mortgage statement and gives you more control over your monthly spending than other types of mortgage.
Length of fixed rate mortgages
You can usually fix the rate on your mortgage for between two and five years at a time. Although you may be able to get a fixed rate mortgage for between seven and ten years, or sometimes even longer, too.
Another consideration of a fixed rate mortgage is that your interest rate won’t be affected if the Bank of England interest rate changes.
If the interest rate rises, you won’t have corresponding increases in your repayments for the duration of the introductory rate on your mortgage deal. However, if interest rates drop, it’s likely you won’t be able to find a better deal without paying an early repayment charge.
What happens when the fixed rate ends?
If your fixed rate ends and you haven’t completed a new mortgage agreement, by default you’ll move to paying a standard variable rate (SVR).
The SVR could change regularly – either up or down. SVR mortgages are not usually the cheapest way to repay, so it’s worth looking into getting a new mortgage deal when this happens.
Fixed rate mortgages: pros and cons
The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like MoneyHelper.