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Could a fixed rate be right for you?


Choosing a fixed rate mortgage will ensure your monthly mortgage payments remain fixed for the initial benefit period, keep reading to see if a fixed rate mortgage could be right for you.

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What is a fixed rate mortgage?


A fixed-rate mortgage is a mortgage that has an interest rate that stays the same for an agreed period of time.

Common fixed rate periods are as follows:

  • 2 Year Fixed Rate Mortgage
  • 3 Year Fixed Rate Mortgage
  • 5 Year Fixed Rate Mortgage
  • 10 Year Fixed Rate Mortgage

The main benefit of deciding on this type of mortgage is your monthly mortgage repayments will still stay the same throughout the chosen fixed period, even if interest rates rise, such as the Bank of England increasing the base rate.

This means you won’t see any increase in your mortgage repayments during the fixed term, which tend to make budgeting for each month easier.

The negative with this type of mortgage is if interest rates do fall during the fixed period, your monthly mortgage repayments will remain the same, and you will not benefit from any decrease in interest rates.  

When the fixed period ends, the interest rate will return to the lender’s standard variable rate, which is usually higher than the interest rate on the fixed deal.

Typically, 3 to 6 months before this point is when you will need to sit down and review your mortgage with a mortgage adviser and discuss a re-mortgage, check out our re-mortgage page.

What are the benefits of a fixed rate mortgage?


The main benefits to a fixed rate mortgage include:

  • You’ll be protected from interest rates rises, If interest rates increase sit back and relax because your monthly payments will not change.
  • Fixed-rate mortgages make budgeting simpler, due to the fact your monthly payments will not change during the fixed period.
  • Fixed rate mortgages are easy to understand. 

What are the disadvantages of a fixed rate mortgage?


The main disadvantages of a fixed rate mortgage include:

  • If interest rates do fall, you won’t see any decrease in your monthly payments, while a variable rate mortgage such as a tracker mortgage will become cheaper.
  • A fixed-rate mortgage will usually have expensive penalties if you redeem the mortgage early.
  • There will be limited options for fixed rate mortgages with no early repayment charges, this may be an expensive option if you are looking to sell the property within the fixed period.

How long should you fix your mortgage for?


The important thing to do when asking yourself this question is to speak to a mortgage adviser, a mortgage adviser will look at your circumstances and guide you to the correct option which meets your needs and circumstances. Shorter term fixed rates will typically allow for more flexibility, but longer term fixed rates will mean less flexibility but more peace of mind if you are concerned with interest rates rising in the future.

What are the benefits of shorter term fixed rate mortgage?


The main benefits of a shorter term fixed rate mortgage are as follows:

  • A shorter term such as a two-year fixed rate may be useful if you may potentially outgrow your home in the short term.
  • If interest rates fall in the near future, you will be able to move to a cheaper rate quicker than if you had taken a longer term fixed rate. 
  • Early repayment charges tend to be cheaper for shorter term fixed rate mortgages.  

What are the disadvantages of a shorter term fixed rate mortgage?


The main disadvantages of a shorter term fixed rate mortgage are as follows:

  • If interest rates rise in the shorter term, this could result in you paying more interest than if you had chosen a longer term fixed rate.
  • Although interest rates tend to be cheaper on shorter term mortgages, the cost of reviewing your mortgage more frequently such as arrangement fees and conveyancing fees could result in you paying more than a longer term fixed rate mortgage. 

What are the benefits of a longer term fixed rate mortgage?


What are the main benefits of a longer term fixed rate mortgage?

  • If interest rates rise in the near future, your monthly repayments will not change for longer, which could result in you saving for longer than if you had decided on a shorter term fixed rate mortgage.
  • Longer fixed rate mortgages could be cheaper than shorter term mortgages as you will not need to review your mortgage as frequent, which could save you on fees. 

What are the disadvantages of a longer term fixed rate mortgage?


What are the main disadvantages of a longer term fixed rate mortgage?

  • Early repayment charges tend to be expensive, this could result in a problem if you have outgrown the property, as you would need to rely on your current lenders criteria rather than searching the market for lenders who could potentially allow you to borrow more.
  • If interest rates fall a longer term fixed rate mortgages such as a 10-year fixed rate may result in you paying more for a longer period of time. 

 

How can I find the right fixed rate deal?


It is important to understand when looking for a fixed rate mortgage to consider the fees and any other potentially costs that you may incur, as typically looking for the lowest interest rate may result in you paying more over the initial benefit period.

Blossomfield mortgages has access to thousands of mortgage products, by sitting down with one of our expert mortgage brokers we will quickly find you the right deal for your needs and circumstances.
 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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Frequently asked questions...

How much can I borrow for my new mortgage?

How much you can borrow is down to your individual affordability, taking into account your income and outgoings. Lenders will also look at your credit score and any financial commitments you currently have. Our mortgage brokers will always advise you on the lender(s) who can offer you the most suitable and affordable mortgages.

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My bank will not lend me the amount we need. Can we still buy the house we like?

Blossomfield Mortgages has access to mortgage deals that are not available direct from lenders on the high street. Loan amounts will differ from lender to lender, and some lenders may offer a bigger mortgage than others. Our friendly mortgage brokers will discuss affordability to see which lender’s criteria you meet and how much you can borrow responsibly.

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