A Fixed Interest Mortgage guarantees the mortgage interest rate for typically 2,3,5 years.
Currently (28/2/06) most rates are between 4.5 and 5%.
Attractions of Fixed Rate Mortgages
1 You know your mortgage repayments for 2,3,5 years
2 The rate won’t go up.
3 Good rates are available.
Disadvantages of Fixed Rate Mortgages
1 Normally pay a fee of £400-500.
2 Don’t benefit if rates go down.
3 Repayment goes up dramatically after the fixed period ends.
4 You’re caught in a constant cycle of remortgaging to get the benefits.
5 There are severe penalties for switching mortgage during the term.
Like any serious financial commitment it is recommended you take proper advice. Please note the caveats at the foot of the page.