For most of us, deciding to take on a mortgage is a huge long term financial responsibility and you need to make sure that you can afford the repayments. Fluctuation rates can make budgeting for a mortgage, which you may have to repay for the rest of your working life, a daunting task.

First time buyers are especially vulnerable to being overwhelmed by this complexity and this is why so many are turning towards Fixed Rate Mortgages.

What is a fixed rate mortgage?
Can I leave a fixed rate before its term expires?
Why should I get a fixed rate mortgage?
How long is the rate fixed for?

What is a fixed rate mortgage?

In a fixed rate mortgage the interest rate is set to the one at the time of you took your out your mortgage, letting you know exactly where you’ll stand from the start.

With a fixed rate any rise in interest rates will not effect how much you pay back. If the Bank of England, however, decides to lower interest rates you will lose out on any potential savings you could have made.  This means fixed rates can result in you paying less back less than a variable one but it also carries the risk that you could end up paying back more.

Where the rate is fixed will vary from lender to lender but it is usually just above the base rate at the time.

Once the fixed rate period is over the mortgage will revert the lender’s standard variable rate. It is possible to switch to another fixed rate deal if you want to but this new deal will probably differ, depending on the base rate at the time. Top

Can I leave a fixed rate before its term expires?

If you become unhappy with your fixed rate mortgage you can usually get out of it before the term has expired, but this can be a costly process due to penalties attached by your lender. Top

Why should I get a fixed rate mortgage?

Uncertainty drives around 75% of new home owners to choose a fixed rate. Homes on a set budget benefit most from fixed rates because it provides stability and allows you can budget for the future.

Households can also benefit from potential savings by setting their mortgage to the recent historically low levels of interest and insulate themselves against any future rises. Top

How long is the rate fixed for?

When you start paying back the loan, your fixed rate will protect you from changes in the market but only for the agreed set amount of time after which the mortgage cost will revert to the lender’s standard variable rate. The fixed rate’s term varies depending on your circumstance and can last from two years and up to five. Top