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Fixed Rate Mortgages

What is a fixed rate mortgage?

A fixed rate mortgage is a type of mortgage where the interest rate remains the same for a set period of time, typically two, three, five and ten years. This means that your monthly mortgage payments will remain the same during this period, regardless of any changes to the Bank of England base rate or your lender's standard variable rate.

 

Fixed rate mortgages can provide peace of mind and stability for homeowners, as they know exactly how much they will be paying each month. However, it's important to note that fixed rate mortgages may come with higher interest rates than variable rate mortgages, so it's important to weigh up the pros and cons before making a decision.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Best fixed rate mortgage

To find the best fixed rate mortgage, you'll need to compare rates from multiple lenders, taking into account factors like the mortgage term, product fees, valuation fees and your financial situation. It's not about grabbing the first deal that comes your way. You've got to do your homework.

 

Start by knowing your credit score and understanding how it affects your interest rates. The better your score, the lower your rate could be. Then, look at the mortgage term. A shorter term usually means higher monthly payments, but less interest over the life of the mortgage. Conversely, a longer term could mean lower monthly payments but more interest in the long run.

 

Don't forget to factor in fees. Some lenders may offer low rates but charge high fees, which could cost you more in the end.

 

Lastly, balance your mortgage against your overall financial picture. Don't let a low rate tempt you into a mortgage you can't afford.

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2 year fixed rate mortgages

A 2 year fixed rate mortgage is a type of mortgage where the interest rate remains the same for the two years of the mortgage term. This means that your monthly mortgage payments will remain the same for the first two years, regardless of any changes in the Bank of England base rate or your lender's standard variable rate.

The pros of a 2 year fixed rate mortgage are that it provides certainty and stability for your monthly mortgage payments, which can help with budgeting and planning. Additionally, if interest rates rise during the two year fixed rate period, you will be protected from any increase in your mortgage payments.

The cons of a 2 year fixed rate mortgage are that the interest rate may be higher than other types of mortgages, such as variable rate mortgages. Additionally, if interest rates fall during the two year fixed rate period, you will not benefit from any decrease in your mortgage payments.

It's important to note that after the two year fixed rate period ends, your mortgage will typically revert to your lender's standard variable rate, which may be higher than the fixed rate you were previously paying. It's important to consider your options carefully.

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5 year fixed rate mortgages

A 5 year fixed rate mortgage is a mortgage type where the interest rate remains constant for the first 5 years of the mortgage term. This means that your monthly mortgage payments will remain the same for the first 5 years, regardless of any changes in interest rates.

The advantages of a 5 year fixed rate mortgage are that it provides stability and predictability in your monthly mortgage payments, which can help with budgeting and planning. Additionally, if interest rates increase during the 5 year fixed rate period, you will be protected from those increases.

The disadvantages of a 5 year fixed rate mortgage are that the interest rate may be higher than other types of mortgages, such as variable rate mortgages. Additionally, if interest rates decrease during the 5 year fixed rate period, you will not benefit from those decreases.

It's important to consider your personal financial situation and long-term goals when deciding whether a 5 year fixed rate mortgage is suitable for you. It may be helpful to speak with a mortgage advisor to discuss your options and find the best mortgage product for your needs.

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10 year fixed rate mortgages

A 10-year fixed rate mortgage is a type of home loan where the interest rate remains the same for the entire 10-year period. This means that your monthly mortgage payments will also remain the same, providing you with a predictable and stable payment plan.

One of the main advantages of a 10-year fixed rate mortgage is that it offers peace of mind and stability. You won't have to worry about fluctuations in interest rates, which can make budgeting and financial planning easier. Additionally, you may be able to secure a lower interest rate compared to other of mortgages, which can save you money in the long run.

However, there are also some potential downsides to consider. For example, a 10-year fixed rate mortgage may have higher monthly payments compared to other types of mortgages, which can be a strain on your budget. Additionally, if interest rates drop during the 10-year period, you won't be able to take advantage of the lower rates without refinancing your mortgage, which can be costly.

Overall, a 10-year fixed rate mortgage can be a good option for those who value stability and predictability in their mortgage payments. 

Leaving a fixed rate early

Exiting your fixed rate mortgage early can have its own set of challenges and costs, so it's crucial to understand the implications before making the leap. You might be considering this move for various reasons - perhaps you've found a better rate elsewhere, or maybe you're selling your property. Regardless, you'll need to be prepared for potential early repayment charges.

 

Lenders often impose early repayment charges to recoup the interest they'd lose if you pay off the mortgage ahead of schedule. These fees can range from a few percent of the remaining balance, which can add up to substantial amounts. You'll need to weigh up whether the potential savings from a new deal outweigh these costs.

 

Additionally, there could be exit fees to close your account, and you might also face new setup costs with your next lender. It's essential to factor these into your decision-making process.

If you are looking to repay your mortgage as part of a home move then exploring your porting options could represent a more suitable option. You can read about porting on our home mover page.

Fixed rate mortgage ending

You'll need to carefully consider your options as your fixed rate period comes to an end. It's a crucial time as your repayments could increase. However, with careful planning, you can avoid unnecessary stress.

 

Firstly, it's wise to reassess your financial situation. Can you afford a potential increase in your monthly payments? If not, it's time to look for an alternative mortgage deal. You're not stuck with your current lender; It is actually advisable to liaise with a broker who can asses your new options from across the whole of the market.

 

As your broker we would ask your current lender to send you a letter confirming their options up to 6 months before your current fixed rate ends. We would then be in touch to discuss the options available from across the rest of the mortgage market.

  • What Is the Eligibility Criteria for Applying for a Fixed Rate Mortgage?
    To qualify, you'll need a good credit score, stable income, and a low debt-to-income ratio. Lenders also consider your employment history. It's not just about net worth, but your ability to make consistent payments.
  • Can I Switch to a Fixed Rate Mortgage From A Variable rate mortgage.
    Yes, you can switch from a standard variable rate to a new fixed rate. You can do this through requesting a remortgage, which is moving your mortgage from one lender to another. You can explore this more on our remortgage page. Alternatively it may be financially beneficial to remain with your current lender and seek a new product with them.
  • Are There Any Penalties for Late Payments on Fixed Rate Mortgages?
    Yes, there can be penalties for late payments. It's important to review your mortgage offer carefully, as terms may vary. If you are worried about your finances or struggling to meet your mortgage payments it is always advisable to contact your mortgage lender as soon as possible. Remember, your mortgage is secured against your home (or other property) and failing to maintain your payments can result in repossession.
  • Can I Remortgage Before My Fixed Rate Ends?
    Yes, you can remortgage before your current fixed rate deal ends. However, you'll likely face early repayment charges. It's crucial to weigh the costs of remortgaging against the potential savings. Your early repayment charges will be available to view on your mortgage offer, by speaking to your lender or liaising with your mortgage broker who can obtain these for you.
  • Are all mortgage brokers whole of market?
    When it comes to the range of products they offer, not all mortgage brokers are whole of market. Some brokers have limited access, which means they can't provide you with all the options that might be beneficial for you. They might only be able to offer the products from a select group of lenders. In contrast, whole of market brokers have access to a wider range of products from various lenders. They aren't tied to any specific lender, allowing them to provide you with the most suitable mortgage deal that fits your individual needs. Here's a quick rundown of what to expect from both types: - Limited access brokers mightn't provide a full spectrum of options, which could cause you to miss out on a better deal. - Whole of market brokers can offer a greater variety of mortgage products, increasing your chances of finding the perfect fit. - Brokers with limited access may speed up the mortgage process, but at the potential cost of a better deal. - Whole of market brokers might take longer to finalise your mortgage due to the wide range of options they explore, but it's worth it if you end up with a better deal.
  • Are there any risks to not getting advice from a broker?
    Skipping professional advice from a mortgage broker could expose us to certain risks. It's easy to fall into the trap of thinking we've got it all figured out. After all, we've got countless online resources at our disposal. However, without a broker's expertise, we're likely to encounter some challenges. There are several potential pitfalls we could stumble into: Lack of Access to All Options: Brokers have access to a wider range of mortgage options than we do as individuals. Without their guidance, we might miss out on a better deal. Risk of Overpaying: Without a broker's knowledge of the market, we could end up accepting a mortgage with higher interest rates or unfavorable terms. Complex Process: Navigating the mortgage process can be complex. A broker's expertise can streamline the process and reduce the risk of errors. Time-consuming: Searching for the right mortgage, negotiating terms, and handling paperwork can be time-consuming. Brokers can handle these tasks on our behalf, freeing up our time Regulatory Protection: If you do not take advice and the mortgage later turns out to have been unsuitable for you then you do not receive the same levels of consumer protection offered through the Financial Conduct Authority, Financial Ombudsman and Financial Services Compensation Scheme
  • When is the best time to get a mortgage broker?
    Given the potential pitfalls of navigating the mortgage process without professional guidance, it's crucial to determine the ideal timing to bring a mortgage broker into the picture. We believe the best time to engage a broker is at the very beginning of your home buying journey. Before you even start looking at properties, a broker can provide a clear understanding of your borrowing capacity, which can significantly streamline your property search. They'll assess your financial situation and give you a realistic idea of how much you can borrow. This can prevent the disappointment of falling in love with a property that's beyond your budget. Furthermore, when you're ready to secure your mortgage, a broker's expertise can prove invaluable. They can negotiate on your behalf, potentially securing better interest rates or terms than you could achieve alone. They'll also guide you through the paperwork, ensuring all necessary documentation is correctly completed and submitted. In essence, the earlier you involve a mortgage broker, the smoother your property purchase journey can be. They'll help you make informed decisions from start to finish, providing a pivotal role in securing your dream home.
  • What questions should I ask my mortgage broker?
    To ensure we're getting the best possible deal, it's crucial you ask your mortgage broker the right questions. First, you should ask about their experience and qualifications. It's important they've a deep understanding of the industry and the necessary credentials to back that up. Next, you must inquire about the types of mortgages they offer. Not all brokers offer all types of mortgages, so we need to ensure they can provide the home loan that suits our needs. You should also ask about fees. While we're often focused on the interest rate, it's just as crucial to understand all the fees involved.
  • Do you charge a fee?
    We charge a fee for our services, of £425, because we are confident we offer invaluable services to our clients. We act as the intermediary between yourself, as the borrower and the mortgage lender. In addition to this we will liaise with the estate agents involved and your conveyancers to speed the process along. As we are whole of market we have access to a wide range of lenders and mortgage products, including those that are not widely advertised. This means that we can often find loans with lower interest rates and better terms than borrowers would be able to find on their own. Overall, however, many clients as is seen from our reviews, tell us that the fee for our services was worth the payment for the time, lack of paperwork and stress we remove from the process. Obtaining a mortgage whether a first time buyer or an experienced portfolio landlord can be a stressful time, as our clients our goal is to remove this for you and make the process as streamlined as possible.
  • What is a first time buyer
    A first time buyer is a person who is purchasing a home for the first time. Many lenders offer special programs and incentives for first time homebuyers, such as a smaller deposit, fee incentives and better mortgage rates. In addition to this as a first time buyer you may be eligible to use your help 2 buy ISA's as part of your deposit. For first time buyers, the threshold for paying stamp duty is much higher. There are exclusions from being a first time buyer to be mindful off, typically for instance if you are buying with a partner who has owned a home before then you would normally not qualify for these benefits.
  • First Time Buyer in Scotland
    We offer a wide range of services to help first-time buyers in Scotland secure a mortgage. Our highly experienced mortgage brokers will work closely with you to understand your unique circumstances and help you navigate the complex mortgage application process. We can advise you on the most suitable mortgage product to fit your needs, provide you with expert guidance on how to improve your credit score, and help you understand how much you can borrow. Additionally, we offer support with the paperwork involved in the mortgage application process. Our goal is to make the process as stress-free as possible while ensuring that you secure the right mortgage product at the right rate for you. We understand that buying your first home can feel daunting, which is why our approach is focused on providing personalised guidance and support throughout the process. With our expert knowledge of the Scottish property market and close relationships with lenders, we are ideally placed to help you secure the right mortgage for your needs. We are committed to providing transparent advice and excellent customer service, and we work hard to ensure that our clients come away feeling confident and ready to take the next steps in their homeownership journey.
  • Do first time buyers pay stamp duty?
    Yes and no. Stamp duty is a tax paid on residential property purchases over a certain value in England and Northern Ireland. At present you can buy your first home up to a value of £425,000 without paying any stamp duty on this. As the rates of stamp duty can change before proceeding we would always recommend you visit the governent site to calculate your own stamp duty on potential properties to avoid incurring large unexpected bills later down the house buying process https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
  • Does a mortgage decision in principle guarantee a mortgage?
    No, a mortgage decision in principle is not a guarantee that a mortgage will be approved by the lender. A decision in principle, also known as a mortgage promise or agreement in principle, is a preliminary assessment of whether someone is likely to be approved for a mortgage, based on their income, credit score, and other financial factors. The assessment is typically based on a soft credit check, which does not leave a footprint on the person's credit report. While a decision in principle can be useful for indicating a person's borrowing power and giving them an idea of what they can afford, it is not a formal offer of a loan. A full mortgage application would still need to be made and assessed by the mortgage lender, who would consider additional information such as the property being purchased, the deposit amount, and the borrower's employment status. It's important to note that the decision in principle is not a guarantee of the interest rate, as this will depend on the lender's assessment of the full mortgage application. Additionally, a decision in principle is typically valid for a limited period of time, and if too much time has passed between the decision in principle and the full application, the lender may need to reassess the borrower's financial situation.
  • Do First Time Buyers Pay Stamp Duty in Scotland?
    In Scotland, first time buyers are exempt from paying the Land and Buildings Transaction Tax (LBTT) on properties up to £175,000. However, if the property is over £175,000, first time buyers will be required to pay LBTT on the portion of the property price that exceeds £175,000. We can help first time buyers understand their stamp duty obligations and guide you through the process of purchasing their first home in Scotland. We will provide personalised advice and support to ensure that first time buyers have a smooth and stress-free home buying experience.
  • What are the eligibility criteria for applying for a UK tracker mortgage?
    To be eligible for a tracker mortgage, you generally need to meet certain criteria. This includes having a good credit score, a stable income, and the ability to provide a deposit of at least 5% of the property value. The lender will assess your income and outgoings to determine how much they are willing to lend you. You'll need to provide documents such as payslips, bank statements, and proof of ID and address. The terms and conditions of each UK tracker mortgage may differ, and lenders may also consider factors such as age, employment status, and the property type and location.
  • Can a Tracker Mortgage Be Transferred to Another Property?
    Yes, you can transfer a tracker mortgage to another property. It's called 'porting'. You'll need to meet your lender's criteria for the new property and may have to pay a fee, so it's worth checking. Please refer to our homemover page for more information on porting.
  • What Happens to My Tracker Mortgage if the Bank of England Base Rate Drops to Zero?
    If the Bank of England base rate drops to zero, your tracker mortgage rate will also decrease. You'll see a reduction in your monthly payments as they're directly linked to the base rate, remember however that your mortgage tracker may have a collar linked to it. A mortgage tracker collar is a limit below which your rate will not decrease regardless of what happens to the Bank of England base rate. Full details on this can be found within our Tracker Mortgage Page
  • How Does the Early Repayment Charge Work With a UK Tracker Mortgage?
    If you decide to repay your tracker mortgage early, you'll usually face an early repayment charge. It's typically a percentage of the loan you're repaying, but the exact amount can vary based on your lender's terms, remember some lenders tracker products are available with no early repayment charges.
  • What happens to my tracker mortgage if the Bank of England base rate changes?
    Tracker mortgages are directly tied to the Bank of England (BoE) base rate, meaning that any changes to the base rate will affect the interest rate on your mortgage. If the BoE base rate increases, the interest rate on your tracker mortgage will also increase, which means that your monthly payments will also increase. On the other hand, if the BoE base rate decreases, so too will the interest rate on your tracker mortgage, ultimately resulting in lower monthly payments. For example, if you have a tracker mortgage with an interest rate that is set at 2% above the BoE base rate, which lets say is 3%, then you would pay a rate of 5%. Let's pretend the BoE base rate increases to 4%, you would now pay a rate of 6%, as the example product above is BoE base rate + 2% Conversely, if the BoE base rate decreased from 3% to 2%, your interest rate would decrease to 4%, as the product example above is BoE base rate + 2%

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