Fixed Rate Home Mortgages

What exactly are fixed rate home mortgages?

Fixed rate home mortgages refer to the way that the interest portion of the mortgage is repaid. Fixed rate home mortgages offer a fixed rate (typically 1-3% over the Bank Of England base rate) for a fixed period of time. As the Bank Of England base interest rate increases or decreases the interest rate of the mortgage remains the same.

The advantage of this type of home mortgage is that the repayments remain the same irrespective of what happens with the Bank Of England base rate. The disadvantage is that should the Bank Of England base rate decrease the repayments and interest charged on the home mortgage does not alter, meaning that you may end up paying more on your fixed rate home mortgage repayments than you need to.

Fixed rate home mortgages offer you the peace of mind that for a given period of time your repayments will remain the same. Budgeting and home finances are made easier for 2-7 years, the normal fixed term period. For this reason fixed rate home mortgages are very popular and a large number of lenders offer them.

One of  the problems with fixed rate home mortgages are that majority of lenders charge a fee for early redemption (possibly up to 2% on the balance) should you repay or transfer your home mortgage to a different lender.