Fixed rate mortgage

A fixed rate loan gives you a guaranteed rate of interest for an agreed period of time.

This can be very comforting if you have a large loan or a tight budget, because it guarantees the payments won't rise.

But if interest rates fall, your mortgage payments will stay the same until the end of the fixed term, so you should think carefully how long you want to be locked into the same rate.

Most of the larger lenders will have several deals available, offering fixes of anything from one to 10 years or even longer.

When the period ends, the mortgage usually to the lender's standard variable rate. Some lenders will guarantee to offer another fixed rate option, usuallyfor an arrangement fee, but can't say beforehand w hat the new rate will be.

Fixed rate mortgages often have financial penalties if you want to switch to a different type of loan, or repay your mortgage during fixed term.

It's also important to check whether you can transfer the deal and the rate to a property if you move. Lenders usually limit any transfer to the amount you still owe on the original mortgage, so you may have to pay more for taking out an extra loan.

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