Fixed Rate Mortgages
These fix the interest rate for a specified period of time, perhaps 2 years, 3 years, 5 years or even 10 years, so the interest rate on the mortgage and the monthly payments remain constant for that period of time – so you know exactly what you’re paying each month!
At the end of the fixed rate period you generally move onto the mortgage lenders own Standard Variable Rate (SVR) – normally around 2%-3% higher than the Bank of England Base Rate.
During a fixed rate period you are normally tied in to the mortgage with early redemption penalties payable should you wish to pay off the mortgage in part or full. After the fixed rate period you are normally free to redeem the mortgage in full without penalty* – allowing you to remortgage if you want to.