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A Guide to Fixed-Rate Mortgages

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 29, 2022

Fixed-rate mortgages are amongst the most popular type of mortgage deals available from UK lenders. But what exactly are they? How do they work? And, how do they compare with other types of mortgage deals?

If you’re a first-time buyer considering a fixed-rate mortgage or have more experience in the market and would like to know how to find the best deals available, this guide will give you all the background information you need.

What is a fixed-rate mortgage and how do they work?

A fixed-rate mortgage is a type of mortgage loan where the applied interest rate will not change, either up or down, for a specific period of time.

They are typically available for both types of repayment method: interest-only and repayment. Each UK lender will have their own array of deals across a range of different time scales.

Generally, fixed-rate mortgage terms are set for at least one year. The most common fixed terms offered tend to be either 2 or 5 years, although you can also find 3 and 7 years fixed terms. Some lenders can agree to ten-year fixed-rate terms in certain circumstances.

With a fixed-rate mortgage, both the interest rate and the term are set at the outset by the lender. Regardless of what happens to the Bank of England’s base rate or your lender’s standard variable rate (SVR), your fixed-rate will not change.

The clear benefit of a fixed-rate mortgage is the comfort of knowing that your mortgage payment will remain the same for the period of the offer, regardless of any interest rate volatility the market may be experiencing.

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Your options at the end of a fixed-rate term

At the end of the fixed-rate period you have a number of choices:

  • Move onto your lender’s SVR mortgage rates
  • Choose another fixed-rate mortgage deal with your existing lender
  • Choose to remortgage with another lender offering a better fixed-rate deal
  • Opt for a different type of deal altogether (tracker rate, capped rate, etc) either with your existing lender or remortgage with a new lender

If you allow your current fixed-rate mortgage deal to expire and move onto your lender’s SVR mortgage rate, it’s highly likely that there will be a difference between the two, therefore, you may see an increase in your payments at this point.

Your lender will usually contact you a few months before your fixed-rate period ends to discuss their suite of products available for you. At this stage, it’s usually wise to review what other deals are available from other UK lenders.

This is where we can help. The advisors we work with have an in-depth knowledge of the offers available across the UK mortgage market. If you get in touch we can arrange for an expert to contact you and help decide which offer is the best one for your circumstances.

How interest is calculated on a fixed-rate mortgage

When a lender is calculating the interest you’ll be charged on a fixed-rate mortgage, they look at your creditworthiness and the level of risk they think they may be taking if they lend to you.

They will look at your credit rating, your age, your income and expenditure to assess your affordability and, sometimes, the type of property you’re purchasing could also influence the interest you’ll be charged.

There are mortgage calculators which you can use to work out what a mortgage might cost you but they won’t give you a 100% accurate figure or be tailored to your needs and circumstances.

As discussed above, many mortgage lenders promote fixed-rate deals to attract new customers. These fixed rates will last for a set period of time, after which you’ll need to look for a new deal and remortgage or negotiate a new rate with the lender.

To get an accurate view of the best mortgage rate you could qualify for, make an enquiry and we’ll connect you with one of the expert brokers we work with. All the experts are whole-of-market mortgage brokers with access to lenders across the entire market.

They have the knowledge, experience and tools to know which lenders will give you the best mortgage rates and will work to save you time, money and hassle.

Fixed-rate mortgages for first-time buyers

Buying your first house can be quite a daunting prospect, therefore, one of the benefits of opting for a fixed-rate mortgage deal is the peace of mind knowing exactly what your monthly payments are without fear that they could fluctuate.

Trying to find the best fixed-rate mortgage offers, particularly when you’re a first-time buyer, can prove to be quite an arduous task. Why not let us help?

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Speak to a fixed-rate mortgages expert

Fixed-rate mortgages are an extremely popular choice for many people, however, it can be difficult to identify the best offer that suits your particular circumstances. With this in mind, it’s a good idea to speak to an expert before going ahead and applying for one.

We offer a free broker-matching service that will assess your needs and circumstances and cherry pick a fixed-rate mortgage expert for you. This will be somebody who has the exact knowledge and experience that you need, a mortgage broker we’ve personally vetted and can vouch for their track record helping customers just like you.

Call us on 0808 189 2301 or make an enquiry online and we’ll set up a free, no-obligation chat between you and a broker who specialises in fixed-rate mortgages today.


Can you make overpayments on a fixed-rate mortgage?

Yes, it’s possible. However, most lenders will place a cap on the amount you can overpay, normally 10% of the outstanding balance. The overpayment can usually be either through one-off lump sums or as an addition to your regular monthly payments.

If you feel that you need a mortgage that offers complete flexibility to overpay without any restrictions, a standard variable mortgage (SVR) could be one viable option, although the amount you can overpay by will be at the lender’s discretion.

What is the impact of inflation on a fixed-rate mortgage?

The impact of inflation on a fixed-rate mortgage could be good or bad depending on whether it increases or decreases.

Rising inflation can cause the Bank of England’s base rate to rise, which subsequently causes UK lenders’ variable mortgage rates to follow suit. In this event, a fixed-rate mortgage could become a safe haven as your payments will not be affected during this period.

However, if inflation falls and, therefore, the base rate is reduced the knock-on effect could be that your fixed-rate mortgage deal is more expensive than some variable rate offers that become available as a result.

Can you have a half fixed-rate, half variable mortgage?

Yes, this is possible. Splitting your mortgage between both fixed and variable will naturally give you the best of both worlds. A fixed rate will shield your mortgage payments from any significant rises in UK base rates whereas a variable rate will give you more flexibility to overpay, if you wish.

The perfect scenario would be to have a 50/50 split (half fixed, half variable mortgage) however, some lenders will allow you to favour one type of mortgage than the other. So, for example, you could have a mortgage that is 70% fixed and 30% variable.

Are fixed-rate mortgages portable?

Most mortgages are portable, including fixed-rate mortgages. However, depending on the circumstances it’s likely that early exit penalties will apply particularly if you want to move your mortgage midway through your fixed term to another provider.

It’s important to weigh up the reasons for wanting to move your mortgage and whether the long-term financial benefits outweigh any fees which may apply.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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