What is a fixed-rate mortgage and what are the advantages?

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Let’s take a deeper look at fixed-rate mortgages and consider the advantages?

In our previous post, we looked at the savings that could be made to your monthly repayments by switching to a fixed-rate mortgage.

If you’re looking to buy a home or considering a remortgage in the near future, this may be a good time to lock in to a fixed-rate arrangement, especially following recent and ahead of (possible) future hikes by the Bank of England.

What is a fixed-rate mortgage?

A fixed-rate mortgage is a loan that maintains the same interest rate throughout the term of the offer. This can be for 2, 3, 5 years or even longer. And with a number of lenders recently announcing very attractive 10-year term fixed-rate mortgages at less than 2.0%, it’s no wonder that many borrowers are considering mortgages with fixed rates.

What are the advantages of a fixed-rate mortgage? Why would it be better than an adjustable-rate mortgage?

This type of mortgage is highly advantageous because your monthly payments remain constant, which makes it easier to budget for your monthly expenses.

If interest rates go up after you buy your home or if you remortage, then your monthly payment stays the same while others’ payments may increase.

While in recent years bank interest rates have remained low at 0.5% or lower, rates are currently at 0.5% (as of 09/02/2022) but may have to increase again to help stem the rising tide of inflation.

A fixed-rate mortgage can be a good choice if you are planning to stay in your home for several years. It makes your repayments predictable, so you can easily see what your monthly expenses will be.

Plus, if you choose to pay extra to reduce your capital balance each month, you’ll have an easy way to track how much you’re saving on interest which can help motivate you to make extra further payments!

The amount of interest you pay is determined by your mortgage interest rate and may or may not represent good value. This is a very good reason to choose taking independent mortgage advice before settling on any new arrangement.

How to find the best fixed-rate mortgage?

If you’re ready to buy a home or refinance your existing mortgage, you’ll want to start by asking us to carry out the research for you.

With experience dating back to 1994, and extensive knowledge of the UK mortgage market, we have both the skills and contacts to source the most suitable arrangement for your needs. We can save you time and money by coming to us and using our independent mortgage expertise!

In case you need further convincing just take a look at the many reviews dozens of satsified clients leave on Google and TrustPilot. See our home page and scroll down.

Here is a summary of the key advantages of a fixed-rate mortgage and how we can help:

  • You will know exactly how much your capital and interest payments will be over the term of the fixed-rate period. Many people find this comforting, especially in times of volatility, as there will be no surprises to how much they owe from month to month. This can help make budgeting easier.
  • Let us do the shopping around for you to find the best rate and terms. A fixed-rate mortgage is a standard product that’s available from many lenders. However, you’ll need to find the best arrangement based on rate, fees, your requirements and the terms and conditions of the offer. And this is where Buckingham James comes in!
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