Fixed Rate Mortgage Updated for 2024

Updated: 18/06/2024

What is Fixed-Rate Mortgage Simple Definition?

A Fixed Rate Mortgage is a type of Repayment Mortgage, but the interest rate is fixed for a set period of time and will not be affected by a Bank of England Rate rise or fall during the fixed rate period or any inevitable fluctuation in the mortgage market rates.

It is normally referred to as an introductory rate, and once you agree to the Fixed Rate Mortgage for however many years, you will then be locked into the introductory rate for that agreed period.

Should you decide at a later date you wish to leave, it is highly likely you will have to pay what is known as ‘Exit Fees’ (Early Repayment charges) to the lender.

Fixed Rate Mortgage

Fixed Rate Mortgage Period

Is a 2-year or 5 year Fixed Mortgage Better?

To explain a little more about this, the fixed rate mortgage period (Which can also be referred to as the initial rate period) is typically an agreement to cover the first two, three, or five years of the mortgage term (And in some cases it could be ten years).

What is the Longest You Can Fix a Mortgage For?

Presently, the longest Fixed Rate Mortgage deal available is for a term of 10 years, but in certain circumstances, it may be longer.

During this time, you will know exactly how much you will be paying each month, and this will not change until the fixed period has expired, thereby making it easier to budget.

That said, if the Bank of England’s Rate were to reduce during this time frame, your payments would remain the same, even though others on different types of mortgages could reduce.

Basically, when you take out a Fixed Rate Mortgage, you will effectively be locking in your mortgage interest rate for that period, which may suit your short to mid-term financial needs.

Advantages of a Fixed-Term Mortgage

There is a certainty about taking out a Fixed Rate Mortgage that can make them very appealing for buyers who are looking to budget for the first few years, meaning it would offer significant protection against any rise in the Interest Rate.

Also, those who may have initial lower earnings, but expect their financial situation to change in the near future.

Fixed Rate Mortgage

Are Five Year Fixed Rate Mortgages a Good Idea?

The Fixed Rate Mortgage Term is a good option at least during a short-term period and allows the borrower to budget efficiently and know exactly what they will pay for the whole period of their home loan.

A Fixed Term Mortgage may also appeal to a First-Time buyer, as they are somewhat easier to understand.

Are there any Disadvantages of a Fixed-Term Mortgage?

Sadly, there is a downside to a Fixed-Term Mortgage in that once you become locked into an initial term, you could find it difficult to switch again due to a hefty ‘Exit Fee’ penalty.

Most lenders will add this to their products for the loan period, so it is something to be aware of.

What is the Fixed Mortgage Rate Today?

As mentioned earlier, please remember that you will not be able to benefit from falls in the Bank of England’s Rate during the term of your Fixed-Rate Mortgage, but on a positive note, you will also be protected from any increases in the rates too.

Also, be aware that when you come to the end of the agreed fixed-rate period, the lender will automatically switch to their Standard Variable Rate, which will most likely be a much higher fee.

Try and plan ahead and make advance plans to get yourself a Re-Mortgage so you can switch to a better deal before paying any excess monthly mortgage repayments — Hopefully you will contact us again by then to advise you!

Fixed Rate Mortgage

 Who is a Fixed Term Mortgage For?

Who would be looking for a Fixed Rate Mortgage, well it would be a wonderful option for someone looking for or who really needs the security and ability to budget accurately at the start of their mortgage term.

A first-time buyer or and of course homeowners who want to be able to lock in a good mortgage rate.

Is it Worth Getting a Fixed-Rate Mortgage?

This could also be a huge advantage if the belief were that the Bank of England’s Rate was to rise in the near future.

 Is there a difference between a Fixed Rate Mortgage and a Tracker Mortgage?

Yes, there is, as a Fixed Rate Mortgage payment would not change in the short term or certainly during the period of the agreement.

The Fixed Rate Mortgage is a good option at least during a short-term period and allows the borrower to budget efficiently and know exactly what they will pay for the whole period of their home loan.

A benefit of a Tracker Mortgage or certainly a point of interest is that your payments would reduce if the rate were decreased, but more about this HERE

Updated 2024

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