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Fixed rate mortgages, could you benefit?

Fixed rate mortgages, could you benefit?

Category: Mortgages

Updated: 31/10/2008
First Published: 10/05/2007

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With inflation on the rise it's widely predicted that the Bank of England will raise interest rates soon. If you're already on a tight budget this could mean you're stretched to breaking point if you have a variable mortgage, as your monthly repayments will go up too.

With a fixed rate mortgage however, this won't happen:

  • Fixed rate mortgages make it easy to budget and plan ahead, because you'll know precisely how much you'll be paying for your mortgage each month, regardless of what happens to interest rates.
  • Fixed rate mortgages can be great for first time buyers, especially if you've had to borrow a large sum to get on the property ladder and want the reassurance of knowing exactly what your mortgage payments are going to be over the next few years.
  • Once the fixed rate period runs out, your mortgage will typically revert back to the lender's standard variable rate, which means your mortgage payments could be more than what you're paying on the fixed rate.
  • It's always a good idea to make sure you think about remortgaging before the fixed rate period runs out, so that you don't end up paying more than you need to.
  • But, make sure that you don't get a fixed rate mortgage with an early redemption penalty that extends beyond the fixed rate term, as this will cost you thousands of pounds if you decide to remortgage when the fixed rate runs out.

The popularity of fixed rate mortgages has increased significantly over the last couple of years and many lenders have started to withdraw some of their best fixed rate mortgage deals because of the expected rise in interest rates. This could prove a nasty shock if you have a fixed rate deal that's due to finish soon!

If you're thinking of buying a house within the next six months you can still take advantage of today's fixed rate mortgage deals, as most lenders will keep the fixed rate deal open for you. So the message is act now if you want to fix your mortgage before the best deals disappear!

Mortgage lenders are desperate for your business and there are thousands of deals to choose from. can help you search and compare nearly 2,000 fixed rate mortgages, in a fast and friendly way with our best buys and searches.

Don't forget to also look out for other incentives like free legal fees, a free valuation, cashback and overpayments or payment holidays. But, please remember to look at all of the costs as well as the interest rate as some of the best rates you find will often come with very high fees, so take the time weigh up the whole package before you decide on a lender.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.