How fixed rate mortgages work

how fixed rate mortgages work

Fixed Rate Mortgages

With a fixed rate mortgage, the interest rate is guaranteed to remain the same for a set period of time, typically one, two, three, five, or ten years.

This gives the advantage of regular, unchanging monthly repayments during the fixed rate period. After the fixed rate ends, the loan normally reverts to the lender's standard variable rate.

There are a couple of disadvantages to fixed rate mortgages. Firstly, if interest rates should fall during the fixed rate period you will not benefit from the savings like you would with a variable rate mortgage. Secondly, the arrangement fees on fixed rate products are sometimes higher than other types of mortgages.

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Think carefully before securing other debts against your home.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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Category: Credit

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