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Do you know the difference between fixed and variable rate mortgages?
Fixed rate mortgages are extremely popular as they offer stability. This is because the mortgage repayments are fixed over a set number of years (2, 3, 5 or sometimes 10 years) and are not influenced by interest rate changes during that time.
Variable rate is pretty much what it says. It is not fixed so it can go up or down. There are two main versions open to most borrowers; first is a ‘discounted variable rate’ that is a discount off the lender’s own standard variable rate. Second is a tracker rate: this is where the rate charged is the same as the Bank of England base rate plus (or sometimes minus) a set margin.
Knowing the difference between the two is the first step but when it comes to requirements and how much you can afford it will depend on a range of different factors. Everyone is different and so is their mortgage.
Below we’ve put together a list of the most frequently asked questions about fixed and variable rate mortgages. If you would like any additional information or to ask your own question, let us know.