Additional Information
Additional Information | Fixed Rate Mortgages
If your mortgage payment changing each month worries you then consider choosing a fixed rate mortgage.
Fixed rate mortgages give you a guaranteed fixed monthly payment for an agreed period of time usually from 1 year to 10 years.
During that period your interest rate will not change, and your monthly payments will remain unchanged whatever happens to other interest rates.
Great Security
The great advantage of this is the security it provides. You know what you will have to pay each month, so when you take out the mortgage you can choose an amount that you know you can afford without having to worry about leaving room for it to go up if interest rates change.
Possible Costs
Fixed rate mortgages often offer excellent value and very competitive interest rates, but they do have two potential downsides:
Falling Interest rates
Even if general interest rates are falling, yours won't, so you might end up paying more than you need to. However, you would have to be quite unlucky to be significantly affected by this, and it is just as likely that interest rates will go up, in which case you will be benefiting as your rate will not change.
Fees
The fees relating to fixed rate mortgages can be quite high, especially if you want to pay off your mortgage or sell during the fixed period. It is common for quite large early repayment or redemption fees to be charged if you wish to do this.
You should check what fees might apply if you need to sell during the fixed period before you sign up to a mortgage. You should also check if any early repayment or redemption fees will apply after the fixed period ends a EUROS these are known as overhanging lock in fees and are best avoided if possible. Not all lenders charge overhanging fees.
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