Fixed Rate Mortgages

A fixed interest rate mortgage offers the borrower the certain knowledge of just how much the mortgage payments will be each month for a set period of time.

A mortgage interest rate that doesnt vary - even if base rates change - may be convenient for household budgeting purposes. You do run the risk if the base rate falls of paying over the odds while others see their mortgage costs coming down.

Conversely you also may face a nasty shock at the end of the fixed rate period if interest rates have risen substantially and there is a large jump in the rate your lender wants you to pay.

These risks notwithstanding fixed rate mortgages have become increasingly popular because of the certainty they deliver for a period tending to be between 1-10 years. Do bear in mind that these deals tend to have penalties attached if you attempt to redeem the mortgage early.

Other options include mortgages which are variable rate, capped or discounted

See also Guide to Mortgages and our latest Mortgage rates

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2009-02-17 00:00:00 © Moneyextra.com