A fixed rate mortgage is when the interest rate on your loan remains fixed for however long the term of the loan is.
Typical fixed rate mortgages range from two to five year deals, but can last as long as ten years it just depends on lenders and what they are offering. Often, once a fix comes to an end, borrowers move onto their lender’s standard variable rate.
Advantages of a fixed rate mortgage
You know from the beginning exactly how much your mortgage will cost you, and you are protected from any increases in rates, because your payments won’t rise during the fix. This therefore gives you peace of mind and more security.
Disadvantages of a fixed rate mortgage
However, it also means that your payments won’t fall if rates decrease. You also face higher starting rates with variable products, in addition to a high penalty if you want to get out early.
Mortgage Repayment Calculator
If you are worried about figuring out your bills per month, this useful little calculator can help you out.
Simply enter the total mortgage loan you took out from the bank, the interest rate they offered you in the deal, and the amount of time in which you have to pay it back in.
The calculator will give you two values. Firstly, the total amount you will have to pay back each month including the interest rate. And secondly, the interest rate by itself so you can see how much that costs.
Be aware that this calculator does not take into account any additional costs the lender may charge for their service.