What is a fixed-rate mortgage?
Put simply, a fixed-rate mortgage has a rate of interest that is guaranteed to stay the same, throughout the agreed term, irrespective of any changes to the Bank of England base rate.
This offers security in the knowledge that you know exactly how much your monthly mortgage repayments will be, and for how long – usually two, five or 10 years depending on what best suits your needs - enabling you to budget and manage your finances more efficiently.
Terms of up to 40 years have been seen in the past, but most homeowners opt to fix for two or five years, albeit 10-year mortgages are becoming more popular.
However, when deciding how long to fix for, short-term rates tend to be lower and if there’s a chance you may be moving within a few years, a short-term mortgage may be more practical as you may well incur early repayment charges if you move before a longer-term mortgage is up.
At the end of the deal term, you are automatically moved onto the lender’s standard variable rate (SVR), but as SVR rates are normally higher, your monthly repayments will increase.
It’s definitely worth looking to get a new deal in place to start as soon as the fixed-term ends.
As whole of market advisers, we compare deals from all the UK lenders to find the best possible option for you – a mortgage that suits your needs and circumstances. We can then find another deal before the term ends, ensuring you are constantly ahead of the game.