A fixed rate mortgage provides you with the option to fix your payments for a set period, typically between two and five years although longer term fixed rates are available.

During the fixed rate period of a fixed rate mortgage you will make the same monthly payments whether the lender’s interest rates go up or down.

At present it is generally the case that the shorter the fixed term, the lower the rate you will pay.

Advantages of a fixed rate mortgage

• A fixed rate mortgage offers you the security of knowing exactly how much you will be repaying during the fixed rate period, which makes budgeting easier
• You have the security of knowing that if interest rates rise during the fixed rate period, your monthly repayments won't rise

Drawbacks of a fixed rate mortgage

• If mortgage rates fall then your fixed rate may prove to be more expensive than a variable rate
• Early repayment charges are likely to apply for at least the term of the fixed period
• In a few cases there may be an “overhanging” early repayment charge. This means that an early repayment charge applies for a longer period than the fixed rate period
• There is generally an arrangement or booking fee payable for a fixed rate mortgage
• After the fixed rate period ends, you will normally have to pay the lender’s standard variable rate - so there may be a large increase in your monthly repayments, particularly if interest rates have risen during the fixed rate period