Fixed rate mortgage loans are the most common product on the UK mortgage market, with the vast majority of first-time buyers and mortgage borrowers seeking the reliability of a fixed-rate loan.
When you choose a fixed rate mortgage the amount you pay every month will be fixed for a specified period of time, whatever happens to the Bank of England base rate and the standard variable rate offered by your mortgage lender.
This type of loan generally lasts for between two and five years, however, 10-year and even 25-year fixed-rate mortgages are becoming more common. When a mortgage borrower reaches the end of their fixed-rate term, the interest rate on their loan tends to revert to the standard variable rate offered by the lender. This can be considerably higher than the fixed-rate deal offered.
Lenders will typically charge something called an early repayment penalty if you wish to cancel your fixed-rate mortgage within the fixed period and transfer to another loan. Some cheaper fixed-rate mortgages, including some of the best fixed-rate deals on the market, will continue to charge an early repayment fee even beyond the fixed-rate period. This is known as a 'tie-in period', and borrowers need to be aware of it when they take out a fixed-rate mortgage.
Fixed rate mortgages provide buyers with stability and peace of mind as they are protected from any increases in the Bank of England base rate, and subsequent adjustments to the lenders standard variable rate. This allows borrowers to budget more easily by knowing what their mortgage payments will be for a fixed period of time.
At Professional Mortgage Services we will review your requirements to establish which lender is offering the best product based upon your individual needs.