What is a fixed-rate Mortgage?
Milton Rodrigues
Updated on 26 June, 2024
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As the name suggests, a fixed-rate mortgage is a type of mortgage where the rate of interest remains the same for a pre-decided period of time. This period is known as the fixed term of the mortgage.
While many lenders offer fixed terms between 2,3 and 5 years, some mortgage lenders stretch it as long as 10 years or more.
One of the biggest benefits of getting a fixed-rate mortgage is that your monthly repayments do not change even if the interest rate in the market (and of your lender) changes. This helps you plan your monthly budget better as there will be no unexpected rise in your mortgage payments. You can compare monthly mortgage payments to See how much you will pay per month on latest mortgage rates comparison https://mariannafs.co.uk/tools/rates.
However, a major drawback of a fixed-rate mortgage is that you wouldn’t be able to take advantage of the drop in the interest rate of your lender.
Even if your lender’s interest rate dips, you will still be required to pay a higher amount as the rate of interest for you is fixed.
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