Is a fixed rate mortgage the right choice for you?

What is a fixed rate mortgage?

A fixed rate mortgage means that the amount of interest you’re charged and the amount you pay each month stays the same over a set period of time. This period of time depends on the mortgage deal you choose – it can be for two, three or five years. Different mortgage providers have different fixed rate periods.

The other option is a variable rate mortgage. This is where the amount of interest you’re charged might change, so your monthly mortgage payments can go up or down.

 

What are my options when the fixed rate ends?

When the fixed rate ends, you can choose to switch to a new mortgage deal. If you don’t switch, we’ll move you on to our standard variable rate or to one of our discounted standard variable rates.

The standard variable rate (SVR) is our default interest rate. The discounted standard variable rate is an interest rate set below the SVR. We offer different discounted rates depending on the fixed rate deal you chose.

Whatever you want to do, we’ll get in touch several months before the end of your deal. This will give you plenty of time to look at other mortgage deals and choose the best option for you.

What are the benefits?

• The interest rate on your mortgage won’t change during your deal, no matter what happens to interest to interest rates elsewhere
• Your monthly mortgage payment is fixed,  making it easier for you to budget
• You can choose how long you'd like to fix your mortgage payment for. The length of time will vary depending on the mortgage deals available. 

What should I consider?

• If interest rates go down during the fixed rate period, your monthly mortgage payment will stay the same.
• If you want to leave your fixed rate deal early, you might have to pay an early repayment charge. 
• For some fixed rate mortgages, you have to pay an extra amount to secure the deal. This is called a product fee. But this doesn’t have to be paid upfront, you can choose to add the fee to your mortgage instead.

 

Is it for you?

With a fixed rate mortgage you know exactly where you stand regarding your monthly payments.  You're protected from any sudden swings in the interest rate, especially any significant increases in your payments if interest rates shoot up.

So if you prefer the security of a set monthly payment, and the peace of mind that comes with it, then a fixed rate mortgage could be right for you.