Fixed Rate mortgages
With a Fixed Rate mortgage, the interest rate you pay will stay the same throughout the initial product term, no matter what happens to interest rates in the market.
This means that you have certainty of knowing what you will pay each month. The downside is that, if interest rates fall, you may be paying more than you would have done had you not fixed your rate.
When the product term ends, the rate will then move onto a Standard Variable Rate (SVR). The SVR you move on to at the end of the product term is usually higher than your fixed rate. So your monthly payment will increase and you need to plan for this.
For this reason, you should monitor your mortgage provider’s variable rate, especially when you're coming to the end of your fixed term . If this is increasing, you should think about reducing your other outgoings accordingly so that you can meet the higher repayments when the time comes.
At the end of your fixed term you can arrange another fixed rate or other type of mortgage. This can be done as a product transfer with your lender or remortgage to a different one. We will contact all of our customers 6 months before the end of the product period to look at the options for you.
If you wish to repay the mortgage before the end of the product period, there will be an early repayment charge to consider. This can be a considerable fee to pay. If you move house your fixed rate may be ‘portable’, which means it might be possible to move it to a new property. If this is important to you, we will ensure your recommended mortgage has a portability option included. Moving is still treated as a new mortgage application so you will need to meet the lender’s affordability checks and other criteria to be approved for the mortgage.
If you have any more questions please don't hesitate to get in touch, we'd be happy to answer them.