Fixed Rate Mortgages

If you're reviewing your mortgage options, there's a lot to consider. But one of the most important things to think about is what type of mortgage best suits your needs.

There are two main types of mortgages - fixed rate and variable rate. And each has its own pros and cons. So, how do you decide which one is right for you?

When it comes to mortgage advice, it can be difficult to know where to turn. But at Echo Finance, we're here to help. Our mortgage brokers are experts in their field and can help you find a mortgage deal that's right for your individual needs. We've helped everyone from first-time buyers to portfolio landlords get the best deal on their mortgage.

If you're not sure whether a fixed rate or variable mortgage is right for you, our brokers can help you compare the two and make an informed decision. We'll also give you access to the latest mortgage rates so that you can find a deal that suits your budget.

To speak to one of our mortgage brokers, call us on 0800 0934 914 or fill in our online enquiry form and we'll be in touch.

What is a Fixed Rate Mortgage?

A fixed-rate mortgage means that your interest rate will stay the same for the initial period of your mortgage, typically between two and five years. After that, your interest rate will reset at a predetermined rate - usually the lender's Standard Variable Rate (SVR).

Fixed-rate mortgage deals are popular with borrowers who want the security of knowing how much their monthly repayments will be for the initial period. They can also help you budget, as you'll know exactly how much you need to set aside each month.

Advantages of longer fixed-term mortgage

The main advantage of a fixed-rate mortgage deal is that you'll know exactly how much your mortgage payments will be for the initial period. This can make budgeting easier and gives you peace of mind that your repayments won't go up.

If interest rates rise during the fixed-rate period, you'll still benefit from the lower rate. This means that you could end up paying less than someone with a variable-rate mortgage, even if they start off with a lower interest rate.

Another advantage of a longer fixed-term mortgage is that it can make it easier to get on the property ladder. This is because you'll have the security of knowing how much your mortgage repayments will be for an extended period of time.

Disadvantages of longer fixed-term mortgages

One of the main disadvantages of a longer fixed-rate mortgage is that you could miss out if interest rates fall. If this happens, you'll still be stuck paying the higher rate for the rest of the fixed-rate period.

Another potential downside is that if you want to move house or remortgage before the end of the fixed-rate period, you could incur early repayment fees. These can be costly, so it's important to factor them into your budget.

How much deposit do I need for a fixed-rate mortgage?

The minimum deposit you'll need for a fixed-rate mortgage is usually 5%.

But the higher your deposit, the better your deal is likely to be. This is because there is a wider pool of mortgage lenders to choose from, and you'll be able to access the best mortgage rates. Not only this but with a lower Loan to Value (LTV), you're seen as less of a risk to lenders, which could lead to a lower interest rate.

So, if you can afford to put down a larger deposit, it could save you money in the long run.

To get the best possible deal on your mortgage, it's important to compare deals from a range of lenders. At Echo Finance, we can help you compare fixed-rate mortgage deals from across the market, so you can find one that's right for your needs.

To speak to one of our mortgage brokers, call us on 0800 0934 914 or fill in our online enquiry form and we'll be in touch.

Is a fixed rate mortgage right for me?

As with any type of mortgage, there are both advantages and disadvantages to taking out a fixed rate mortgage. It's important to weigh up these factors before making a decision, as the wrong mortgage could end up costing you more money in the long run.

Considerations include: 

• How long do you plan on staying in your property? If you're only planning on staying for a few years, it might not be worth getting a fixed-rate mortgage as you could be on the hook for expensive Early Repayment Charges.
• Will your circumstances change? If you think you might need to move house or remortgage before the end of your fixed-rate period, a longer mortgage term might not be suitable. This is because you could incur Early Repayment Charges if you try to exit the deal early.
• Can you afford the higher monthly repayments? Fixed-rate mortgages typically have higher monthly repayments than variable-rate mortgages. This is because you're fixing your repayments at a time when interest rates are typically higher.
• Are you comfortable with the idea of missing out on savings? If interest rates fall during your fixed-rate period, you could end up paying more than someone with a variable-rate mortgage.

Fixed-rate mortgages aren't suitable for everyone, but if you're comfortable with the risks, they could offer peace of mind and budgeting certainty. To get expert advice on whether a fixed-rate mortgage is right for you, speak to one of our mortgage brokers today.

We'll compare deals from across the market and help you find one that meets your needs.

How do fixed-rate mortgages work?

Fixed-rate mortgages work by fixing the interest rate on your mortgage for an agreed period of time. This could be anywhere from two to upwards of ten years, although terms of five years or more are most common. There has been a trend for longer fixed periods in recent years, as borrowers look for stability during periods of low-interest rates.

Your monthly payments are calculated based on the amount you borrow, the term of your mortgage and the interest rate. They remain the same for the duration of the fixed period, giving you peace of mind that your repayments will never increase even if interest rates rise.

What happens if I pay my fixed-rate mortgage early?

If you try to exit your fixed-rate mortgage early, you could incur Early Repayment Fees. These are typically charged as a percentage of your mortgage balance and can be anywhere from 1-5%.

Before taking out a fixed-rate mortgage, it's important to check the small print to see how much you'll be charged in Early Repayment Fees. This will help you avoid any nasty surprises further down the line.

What happens when the fixed period ends?

At the end of the fixed period, most fixed-rate mortgages will revert to a variable rate. This means that your monthly repayments could go up or down, depending on changes to the Bank of England base rate. Many people choose to remortgage after the initial fixed-rate period ends, as you no longer face an early repayment charge and can shop around for a new deal without penalty.

If you're not planning on remortgaging, your lender will usually move you onto their Standard Variable Rate (SVR). This is typically the most expensive type of mortgage rate, so it's important to consider your options carefully. You might want to speak to your lender about switching to a different type of mortgage, or look into remortgaging with a new provider.

If you're not sure what to do at the end of your fixed term, our mortgage brokers can give you impartial advice and help you find the best deal for your needs.

Can I overpay my fixed-rate mortgage?

Yes, depending on your mortgage deal you are typically permitted to overpay up to 10% of the outstanding balance each year without incurring any charges. This is a great way to reduce the overall cost of your mortgage and could help you pay off your loan early.

To find out if your mortgage deal permits overpayments, check your mortgage offer or speak to your lender. Our mortgage brokers can also give you more information

Speak to an expert

If you're looking to compare fixed-rate mortgages, our mortgage brokers can help. At Echo Finance, we've helped thousands of people get the best fixed mortgage rates on their mortgage, save money and secure their financial future.

We search the whole market for the best deals and help you find one that meets your needs. We'll also give you impartial advice on whether a fixed-rate mortgage is right for you and guide you through the process from start to finish.

To speak to one of our mortgage brokers about taking out a fixed-rate deal, call us on 0800 0934 914 or fill in our online form.