A fixed-rate remortgage is a loan whereby the remortgage rate is fixed at a set level of interest. Fixed-rate remortgages can run for two, three, five, ten or even twenty-five years.
During the fixed-rate period, however many times the Bank of England changes interest rates, the rate of repayment on the remortgage will remain the same. When the fixed-rate remortgage comes to an end, the borrower will automatically pay the lender’s standard variable rate, if they have not remortgaged again.
Fixed-rate remortgages have advantages and disadvantages. For instance, if interest rates climb, the borrower who has remortgages to a fixed-rate deal will be protected. But, if interest rates fall, the borrower will not be able to take advantage of falling rates.