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A fixed rate mortgage, sometimes referred to as a “fixed mortgage” or “fixed term mortgage”, is a mortgage where the interest rate you’re charged is fixed to a certain date or for a certain number of years - e.g. 2% interest for 5 years.
A fixed term is different from the overall mortgage term. The overall mortgage term is the total amount of time over which you pay back the mortgage. So for example, you’d take out a 25 year mortgage with a fixed rate of 2% for the first 5 years.
Your lender will transfer you onto their SVR (standard variable rate) when you reach the end of your fixed rate period, unless you choose to remortgage or take a new product with your current lender.
Fixed terms for residential mortgages can typically last between 1 and 10 years. It tends to be the case that the longer the fixed term, the more expensive the rate.
The shortest fixed term available is 1 year. 1 year fixed rate mortgages are extremely rare and only available from specialist lenders. They’re usually based on very specific needs, therefore they typically come with more expensive rates than other types of fixed rate mortgage.
2 year fixed rate mortgages are very popular and there are many on the market. They offer stability for people with no immediate plans to move home and are often cheaper than the other common product – a 5 year fix. Their high level of availability means that they’re typically among the lowest and most competitive fixed rate mortgages.
Most 3 year fixed rates are needs based. They’re suitable if you want to stay in your property now – and therefore want stability - but intend on moving in the next 3 - 5 years. They tend to be more expensive than 2 year fixed rates but cheaper than most 5 year fixed rates.
A 5 year fixed rate mortgage is another common fixed rate product. You may want a 5 year fix if you intend on staying in your property for the medium to long term future but are open to/expect your situation to change later on. It provides stability without asking you to think too far in advance.
The longest fixed term most lenders will offer you is 10 years. 10 year fixed rate mortgages are suitable for people who plan on staying in their home for the foreseeable future and/or would like to budget for the long term with a set monthly payment.
Sometimes lenders will offer fixed rates for more than 10 years – but this is very rare. Talk to your adviser if this is something you require.
You can compare fixed rate mortgages that are currently on the market with our free best buy tool.
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We work around your schedule to help you arrange a mortgage that suits your circumstances, no matter how complex.
When you phone us, you can either arrange a phone appointment with your adviser or a face-to-face meeting – whatever suits you. Your adviser will ask you some questions then go away and find you the best deal for your circumstances and future needs. They’ll organise a follow up during which they’ll present you with what they’ve found.
Once you’re happy with their recommendation, they’ll go about securing your DIP (Decision in Principle) - which is basically a promise from the lender that they’ll loan you money on the condition that the information you’ve provided is correct and subject to a valuation of the property.
After the lender has agreed your scenario, you’ll be in a position to make an offer on a property or move forward with the remortgaging.
Following the acceptance of your offer, we’ll send you some information which explains all the documents we need to submit to the lender. You’ll be assigned a client relationship manager who’ll check and submit certified copies of your documents; they’ll liaise with both you and the lender. Your adviser will then submit the fully packaged mortgage application.
The lender will underwrite your application; this basically means they’ll verify that the information you’ve provided is correct and review all your documents for themselves. They’ll also instruct a valuation for their purposes on the property to make sure there are no significant problems with it.
If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.
After you’ve accepted your mortgage offer, you’ll go through the legal part of the process, known as conveyancing. This is where the solicitors/conveyancers draw up contracts and organise the actual, legal purchase of the property/the remortgage. If you're buying, you’ll also need to arrange buildings insurance at this stage, making sure it’s in place from exchange.
If you’re buying a property, your conveyancer/solicitor will exchange contracts with the seller’s conveyancer/solicitor; it’s at this point that you would put down your deposit and be legally bound to the property. The purchase will complete when the money is transferred on an agreed-upon date. If you’re remortgaging, then your conveyancer/solicitor will set a date to draw down the funds and pay off any existing lender(s) once the mortgage offer’s released.
JC Legal is our exclusive service where we refer you to a solicitor from our carefully selected panel of experts.
After the introductory deal on your fixed rate mortgage ends, you’ll be transferred onto your lender’s SVR (standard variable rate) for the remainder of the mortgage term. A lender’s SVR will normally be much higher than whatever introductory deal you were on – which is why many people choose to remortgage or take a new deal with their existing lender as they come to the end of the fixed period.
You can start to arrange a remortgage up to 6 months before the end of your introductory rate.
Fixed rate mortgages have certain benefits that variable rate mortgages don’t.
Some benefits to fixed rate mortgages include:
On the other hand, variable rate mortgages like discount or tracker rates come with benefits that fixed rate mortgage don’t.
Some benefits to variable rate mortgages include:
Find more information on the different mortgage types in our guide.
It is possible to get out of a fixed rate mortgage by remortgaging onto a new mortgage product or repaying your mortgage. However, you may face ERCs if you remortgage before the fixed period ends. These can often make leaving your current mortgage product before the fixed term ends expensive.
It is possible to remortgage during your fixed term or introductory deal however you’ll likely face ERCs, which can make remortgaging more money than it’s worth.
Many people will remortgage onto a new fixed rate as their current introductory deal is about to end to avoid being transferred onto their lender’s SVR.
There’s no single best fixed rate mortgage deal. What’s best for you will depend on your situation and needs. For example, do you intend on staying in the same property for the foreseeable future – and therefore would value a long term fix – or do you intend on moving after a couple of years? There’s also an option to offset your savings against your mortgage, so that you pay less interest. Speak to one of our advisers on 0344 346 3672 as they’ll tell you which product would best suit you.