Fixed-rate mortgages are fairly popular in the UK. As the name suggests, they allow you to fix the rate of interest you will pay on your mortgage for an agreed period. Most UK mortgage lenders offer a range of fixed-rate mortgages. The most popular are two-year, three-year and five-year deals, but it is sometimes possible to get a fixed-rate mortgage for anything from six months to 25 years.
As a rule, the longer you fix your rate for, the higher the interest rate you can expect to pay.
Pros of fixed-rate mortgages
1. They protect you against rising interest rates
2. Regardless of what happens in the economy and how the Base Rate moves, the interest rate you are charged is guaranteed to remain the same for the duration of your initial deal period
3. They give you peace of mind, as you know exactly how much will be coming out of your bank account
every month with a fixed-rate mortgage. This in turn can help you with your budgeting.
Cons of fixed-rate mortgages
1. If interest rates fall during your fixed rate period, you will not benefit and may feel you are paying over the odds for your mortgage
2. Fixed-rate mortgages come with a fee. Fees have gone up rapidly in recent years. Don't be surprised to be charged between �£500 and �£1,000 to fix the rate of your mortgage.
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The January/February 2012 issue of Your Mortgage is on sale now. In it we feature expert predictions on what will happen to house prices, interest rates and the wider economy in 2012. We also explain the latest State help for first-time buyers, weigh up the relative merits of offset mortgages, and offer handy hints and tips on making sure you have the right home insurance in place. Plus we have all the regular features and our invaluable mortgage basics section. Get your copy now for the latest news, information and help
