Best Buy Mortgages Glossary - Fixed Rate Mortgages
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Fixed Rate Mortgages
A fixed interest rate mortgage offers the borrower certain
knowledge of just how much their mortgage payments will be each
month for a set period of time. Fixed rate mortgages for the
full term of the mortgage remain relatively rare in the UK
housing market.
However, a mortgage interest rate that does not vary with base
interest rates may be convenient for household budgeting
purposes. You do run the risk, if the base rate falls, of paying
over the odds while others see their mortgage costs coming down
and you also may face a nasty shock at the end of the fixed rate
period if interest rates have risen substantially and there is a
large jump in the rate your lender wants you to pay.
These risks notwithstanding, fixed rate mortgages have become
increasingly popular because of the certainty they deliver (for
a period tending to be between 1-10 years). Do bear in mind that
these deals tend to have penalties attached if you attempt to
redeem the mortgage early.
Other options include:
variable rate
mortgages,
capped rate
mortgages or discounted
mortgages.
See also: Current
Mortgage Rates and Deals
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