Fixed rate mortgage

A fixed rate mortgage is the same as any other mortgage in that you can use an interest only or repayment (capital and interest) vehicle; however unlike a variable rate product which will go up and down as interest rates rise and fall, a fixed rate will remain the same for a specified period of time.

First time buyers are often attracted to a fixed rate mortgage because it gives them the certainty of knowing exactly how much their mortgage payments will be, and for how long.

The stability of fixed rates make them attractive to many borrowers, however customers considering this type of product should also bear in mind that if mortgage rates were to drop, their fixed rate will not fall in line with them.

Home owners who find themselves in this position, may also discover that there is a redemption penalty attached to their fixed rate mortgage; this is included in the terms and conditions of the product and explains that any attempt to change the interest rate, or repay the mortgage during the term of the fixed period will result in a penalty charge.