Fixed Rate Mortgages
A fixed interest rate mortgage offers the borrower certain knowledge of just how much their mortgage payments will be each month for a set period of time. Fixed rate mortgages for the full term of the loan are very rare in the UK housing market.
A mortgage interest rate that does not vary with base rates may be convenient for household budgeting purposes. You do run the risk, if the base rate falls, of paying over the odds while others see their mortgage costs coming down. You also may face a nasty shock at the end of the fixed rate period if interest rates have risen substantially and there is a large jump in the rate your lender wants you to pay.
These risks notwithstanding, fixed rate mortgages have become increasingly popular because of the certainty they deliver (for a period tending to be between 1-10 years). Do bear in mind that these deals tend to have penalties attached if you attempt to redeem the mortgage early.
Other options include mortgages which are : variable rate, capped or discounted.