Fixed mortgages – how often have you seen this phrase when you’ve been shopping for a mortgage? Could you put your hand up and say you 100% know exactly what a fixed mortgage is and the benefits?
In the UK, we have a wide range of mortgage types, whether you’re a first time buyer, or looking to expand your portfolio of properties, it’s important to know and fully understand the range of mortgages available (and most suitable) to you. For further reading, ‘a complete guide to UK mortgage types’, we break down the different types.
At The Levels Financial, our team of award-winning Somerset mortgage advisors are on hand to help explain every part of your fixed mortgage and exactly what it entails. Read on to learn all you need to know about fixed mortgages.
- What Is A Fixed Mortgage?
- How Do Fixed Rate Mortgages Work?
- Advantages & Disadvantages Of Fixed Rate Mortgages
- How To Apply For A Fixed Rate Mortgage
- Why Choose The Levels Financial For Your Fixed Mortgage?
What Is A Fixed Mortgage?
A fixed rate mortgage is perhaps the most commonly talked about mortgage on the market, due to its popularity and range of benefits. For a fixed rate mortgage, the mortgage rate, or interest you pay on the amount of money you’ve borrowed from your lender to purchase your home, is set at a fixed rate for a fixed amount of time.
Meaning, you will know exactly how much your monthly mortgage repayments will be every month for a set amount of years. Fixed rate mortgages can be fixed for a variety of lengths, from two to 30 years.
Are Fixed Rate Mortgages Linked To The Base Rate?
Unlike other mortgage types (standard variable rate mortgages or tracker mortgages), fixed rate mortgages are not linked to the Bank of England base rate. So, no matter what happens to the interest rate, whether it rises or falls, during your fixed rate period, your monthly payments will remain the same.
You can find out more about the Bank of England base rate and how it has fluctuated in the following blog posts:
- ‘Inflation rate changes – what this means for mortgages’
- ‘August 2023 interest base rate rising – how can this impact you?’
- ‘Base rate increase to 5% – what this means for you’
- ‘March’s base rate increase and what it means for you‘
How Do Fixed Rate Mortgages Work?
So, you know what a fixed rate mortgage is, but how do they work? When you sign up for your fixed mortgage with your chosen lender, you will be given an interest rate on your mortgage. The interest rate is how much extra you need to pay back on your mortgage each month.
When signing up for your mortgage, you will discuss with a member of our team how long you would realistically like to ‘fix’ your mortgage for. Choosing a length of time that not only best suits your requirements and plans of longevity with your home, but also to provide you with the right deal for you.
For further information about how your fixed mortgage could work for you, get in touch with a member of our team today.
How To Calculate A Fixed Rate Mortgage Rate?
Your fixed rate mortgage rate is calculated, typically, by multiplying the amount borrowed by the interest rate at the time of your mortgage fix. This will then be adjusted depending on the length of time you decide on.
Advantages & Disadvantages Of Fixed Rate Mortgages
When applying for a mortgage, it is important to weigh up the pros and cons of the mortgage type you’re opting for. At The Levels Financial, we always want to make sure our clients are 100% comfortable with the deal they choose. Which is why we always provide clear, jargon-free advice about all mortgage types.
With fixed rate mortgages, there are various advantages and disadvantages of opting for a fixed rate mortgage, highlighted here:
| Advantages Of A Fixed Mortgage | Disadvantages Of A Fixed Rate Mortgage |
|---|---|
| Makes Budgeting Easier – As you always know your monthly mortgage payments | You could be stuck paying a higher rate if you fix and then the interest rate drops. |
| If you’re remortgaging or purchasing a house when the current market conditions have a low base rate, you can benefit from the low-interest rate periods. Keeping their monthly costs low. | f you want to end your fixed rate mortgage contract, you may have to pay an early repayment charge, otherwise known as an exit fee. |
| If you decide to move home, you could port your mortgage and its deal to your new home. (Depending on your lender and agreement). | If the interest rate falls, you won’t feel the benefits of lower monthly repayments. |
How To Apply For A Fixed Rate Mortgage
Want to apply for a fixed rate mortgage? Fixed rate mortgages are normally available for 2-5 years, however, this can be increased depending on your circumstances and choice of lender.
Similar to most mortgages, when applying for a fixed rate mortgage, you may get asked for the following:
Income evidence:
At least three months of payslips (if you’re self -employed see our ‘your self employed mortgage guide’)
Identity evidence:
- Passport
- Driving licence
- Proof of address (this can be in the form of a council tax bill or utility bill dated within the last three months)
- Six months’ worth of bank statements
- Proof of any savings
Lenders may also ask for:
- Household bills
- Travel and commuting costs
- Childcare
- Holidays
- Socialising
- Hobbies
- Credit card or store card repayments
- Loan repayments
- Car finance repayments
- Catalogue of credit accounts
Applying for any mortgage often comes with a lot of documentation and hoops to jump through, see our guides here for more information about how to apply for a mortgage.
- A guide to shared ownership mortgages
- Maternity leave mortgage applications – FAQs
- All you need to know about track record mortgages
- Is remortgaging right for you? A step-by-step guide
- A guide: First time buyer mortgage advice
Why Choose The Levels Financial For Your Fixed Mortgage?
At The Levels Financial, we know that navigating the world of house buying and mortgages is a scary and possibly overwhelming part of an extremely exciting process. This is why we endeavour to always get to know all of our clients and their individual financial and personal circumstances. So we can provide you with clear, understandable and transparent information about your fixed mortgage application.
For more information, or to book your free initial consultation, get in touch with our team today at admin@thelevelsfinancial.co.uk or call us at 01458 772 040
Because we always have your best interests at heart, you need to know…
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
- The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
