The fixed rate mortgage provides guaranteed payments for a predetermined period. Since you are protected against rising interest rates, you can set your budget with confidence. Fixed rates bring security and peace of mind, which some people find invaluable. When you are looking at a debt the size of a mortgage, knowing exactly how much will be going out of your bank account each month can be reassuring. But you must bear in mind that by fixing your rate you are taking a gamble on interest rates.
Fixed rates re available for between six months to twenty-five years, with two to five years being the most popular. If you fix for, say, five years, and the interest rates rise beyond the level you have fixed at in that time, you have made a shrewd investment.

On the other hand, should rates fall during the fixed period, you will have lost out. That is the risk you take and the price you pay for fixed rate mortgages, but you do get peace of mind rolled in with the price. You could look at fixed rate mortgages as a type of insurance. We pay premiums to insure our property against fire and theft. Why not pay a fixed rate to insure against rising general interest rates?

Redemption penalties

If the lender offers a fixed rate or I discounted variable rate mortgage, it may charge a penalty if you decide to cash in on your loan before the fixed rate or discounted loan has run out. Beware – this penalty can run to thousands of pounds.
Watch out, as some lenders charge a redemption penalty, even after the fixed rate or discounted rate period has run out. These are known as ‘overhanging’ redemption penalties, because they overhang your deal.

Fixed rate incentives

To encourage borrowers, lenders may provide special incentives on fixed rate mortgages such as:

· Special rates for first time buyers

· Lower rates for larger loans

· Lower rates for borrowers putting more of their own money into the property purchase, and therefore, low loan to value loans

· Help with legal and survey fees

If you think that the outline of a fixed rate mortgage, with its valuable protection against rising interest rates and peace of mind are for you, or even if its another mortgage product your interested in, why not take a couple of minute to fill out our fast, FREE, simple and secure mortgage application form.