A guide to fixed rate mortgages

When you have a fixed rate mortgage, you are able to set the rate of interest so that it is unmovable for a set period. This type of mortgage is popular, as it helps you to keep control of your monthly payments, knowing that they will be the same each month and will not fluctuate along with interest rates. Your monthly payments will be fixed and will not change, regardless of whether monthly interest rates go up or down, giving you peace of mind.

If you apply for a fixed rate mortgage, there will be plenty of deals to choose from various lenders. The interest you pay depends on the term you decide to fix your mortgage for. Most fixed rate mortgages tend to last between 3-5 years, but it is possible to get a fixed rate that lasts for a shorter term such as two years, or a longer term of up to 10 years. Generally speaking, the longer the term that you fix the rate for, the higher your payments will be. At the end of your fixed rate period, you will be transferred onto the lender’s standard variable rate (SVR), which is most likely to be higher than the rate you were previously paying. You can establish a new deal with your lender or another lender, even if you’re in a fixed rate mortgage.

How do I get the best deal on a fixed rate mortgage?

Good deals on fixed rate mortgages tend to be popular and available for a limited time, so you need to keep your finger on the pulse. Research the market carefully and compare your options. The best kind of deal for you will depend on your circumstances. Consider how long you want a fixed mortgage deal for, whether you’d like the option to make overpayments from time to time, and any potential changes that could happen in your financial circumstances that could affect your mortgage deal. When deciding which deal is right for you, consider the extra costs involved such as the fees to set up the mortgage and any relevant charges. If you have a small mortgage, you may decide to go for a higher rate on your fixed mortgage. If you have a large mortgage, you might like to go for a lower rate.

The different types of fixed rate mortgages

2 year fixed rate

On this type of plan, the interest is fixed for two years, so your payments will stay the same during this time, regardless of what happens to interest rates. Short term 2 year fixed rate mortgages tend to have the best deals available.

3 year fixed rate

Like the two year fixed rate mortgage, this mortgage fixes your payments for a set time. In this case, it’s three years. 3 year fixed rate deals tend to be more affordable than 5 or 10 year deals. However, it is likely that rates will be higher than those on a 2 year fixed rate mortgage. After the three year fixed period ceases, the mortgage will be transferred onto the lender’s standard variable rate (SVR), which can prove expensive.

10 year fixed rate

With this type of mortgage, the rate and the cost of your monthly payments are fixed for a decade. Unsurprisingly, this type of mortgage will be generally more costly than a 2, 3 or 5 year fixed rate mortgage. It is always worth considering how flexible you’d like your mortgage to be before taking out this type of plan. A ten year fixed rate mortgage can be transferred across to a new property if you move home. Fixed rate mortgages tend to have penalty charges if you pay them off early, so consider this before securing a long term deal such as a 10 year fixed rate mortgage.


If you need help or advice on fixed rate mortgages, get in touch with us at iam Mortgages by filling in a simple enquiry form. Our team of mortgage experts will be happy to advise on the right fixed rate deal for you based on your circumstances.