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Our Guide To Fixed-rate Mortgages And The Pros And Cons

Money Savings Advice guide to fixed-rate mortgages

Many people like a fixed-rate mortgage because it’s predictable and easy to manage. As you’ll agree to keep your interest rates the same for a specific length of time, you’ll know exactly how much you’ll be paying every month. With a fixed-rate mortgage, your interest rates won’t fluctuate along with any economic changes.

What Is a Fixed-Rate Mortgage?

With a fixed-rate mortgage, your interest rate will stay the same for an agreed length of time. This makes mortgage payments much more predictable. It is a safe choice for many but can backfire if interest rates across the wider market drop.

A fixed-rate mortgage can work in your favour, protecting you from interest rate increases. If interest rates go up, your monthly mortgage payments stay the same. Of course, the reverse is also true. If interest rates go down, yours will be fixed, and you won’t benefit.

Many people are happy to cut their losses and take a risk that they’ll miss out on better interest rates. If you know you can afford your monthly repayments, it’s often very wise to set them in stone whilst you can.

Keep reading our guide to get the full details and the pros and cons of a fixed rate mortgage

Looking for other information on Mortgages? This guide has info on ‘Fixed Rate Mortgage’. We have also writen extensively about:

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Length Of Fixed-rate Mortgage Terms

Fixed-rate mortgages come with several different term lengths. Most people will have their mortgage rate fixed for somewhere between 2 and 10 years. Occasionally, mortgages have interest rates fixed for up to 15 years or beyond.

Mortgage lenders want to make money, so they’ll typically set a higher interest rate if you’d like to choose a longer-term. It’s not in the lender’s interest to lock you in with low payments for up to a decade.

You’ll need to balance the benefits and risks of entering a longer fixed-length mortgage term. You’ll have extended security for your mortgage repayments, but could end up paying more overall.

Once your fixed-rate term has come to an end, you do have the option to remortgage. You may find that other mortgages come with better deals, or could find that interest rates have risen and you’ll need to pay more from now on.


There are 10.94 million outstanding mortgages in the UK (May 2019).

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Ending A Fixed-rate Mortgage Term

Usually, lenders will move you onto their Standard Variable Rate once a fixed-rate mortgage term ends. The Standard Variable Rate, or SVR, might be a worse optional financially. You’ll be moved over automatically, though the mortgage lender should make you aware that your fixed term is coming to an end.

It’s important to plan ahead, so you can consider your options. If you know that your fixed term is coming to an end, look around for other mortgages to choose from. You’ll be able to remortgage with a different lender or check if your current lender has a better deal than their Standard Variable Rate.

You can even choose to enter into a new fixed-rate mortgage if you’d like.

Fixed-rate Mortgage Early Repayment Charges

Whilst many people love the security they bring, you must be ready to be locked into a fixed-rate mortgage if you’re choosing one. It’s great to have predictable payments, but you’ll be tied in for the term.

If you’d like to switch to a different provider or a different mortgage, you’ll see why a fixed-rate mortgage isn’t perfect. It’s great to be able to find better deals and remortgage, but when you’re tied into a fixed-rate mortgage term, you can’t do this.

Trying to get out before the end of the term means you’ll be charged for early repayment. Early repayment charges can be so high that they erase any benefits of switching. Often, it costs more to get out of your fixed term than you’d save by going elsewhere.

Who Should Get A Fixed-rate Mortgage?

A fixed-rate mortgage could be great for you if you’re someone that likes a clear budget. If you like to know exactly what you’re paying, and exactly when you’ll be paying it, then you’ll want to consider fixed-rate mortgages.

You might also like a fixed-rate mortgage if you’re seeing a changing economy. Interest rates typically rise during a recession, when consumers need credit and businesses are running short of money. High demand for credit can increase interest rates and make borrowing a lot more expensive.

As the economy improves, interest rates can drop because money is more readily available. If you can start to predict what might happen in the future, you can see if a fixed rate is worthwhile.

Of course, nobody can say for sure what’s ahead, but you may identify roughly where the economy might head in the next few years.

Examples Of Monthly Repayments:

The below is an example of how a fixed-rate mortgage monthly repayment can compare to a variable mortgage that fluctuates, and could be lower or higher at different times.

The example given is of a £150,000 mortgage over 25 years.

Variable Mortgage at 1.15%£576 per month
Fixed-rate Mortgage at 1.5%£600 per month
Variable Mortgage 2.5%£673 per month

If you can’t be flexible on your monthly budget, having that consistent payment will make it easier to budget, even though you could save money on a variable rate mortgage if interest rates stayed lower.

After Your Fixed-rate Mortgage

It’s important to remember that a fixed-rate mortgage doesn’t stay the same forever. At some point, your fixed-rate term will end, and you’ll want to be prepared when this happens.

If you passively allow your mortgage term to end, you may end up losing money. By taking an active interest in your mortgage options, you’ll find another way to save money.

Think of your mortgage like a credit card. Many credit cards advertise 0% interest for the first year that you use them. At the end of your first year, you start accruing interest unless you transfer your balance to a new card.

Car insurance is the same, which is why so many people compare prices for their annual renewal. Often, it costs more to stay loyal to one insurer than to move to someone new every year.

A fixed-rate mortgage is the same. Letting your mortgage lender move you automatically could be a very costly error.

Mortgage lenders rely on consumer apathy. They make the most money from people that just can’t be bothered. If you never make an effort to look elsewhere, you could be paying more unnecessarily.



Availability Of A Fixed-rate Mortgage

Fixed-rate mortgages are the most widely available. They’re also the preferred choice, with a majority of homeowners choosing a fixed-rate mortgage term.

Most people look for fixed-rate mortgages that cover them for 2-5 years. Once your fixed-rate term has finished, you’ll be free to look elsewhere for remortgaging deals. If you plan to stay in your current home, you might want to lock in a fixed-rate mortgage with a longer-term length.

Finding The Right Type Of Mortgage

For predictability, security and ease of budgeting, a fixed-rate mortgage is best. Of course, it’s one of the many available options. Even once you’ve settled on a fixed-rate mortgage, you’ll need to decide on a term length.

Finding the right type of mortgage isn’t easy, and many people make the wrong decision. You could take on the wrong mortgage and never know any different, or you could end up regretting your decision once you’re a few years in.

Quick Mortgage FAQs


When you have an offset mortgage, you’re making a decision to give up your savings interest in exchange for a better mortgage deal. Your savings are used to offset your mortgage, so you’ll be able to clear your debt quicker.

Category: Mortgages Main

A flexible mortgage is a more relaxed form of borrowing to pay for your home.  You’ll be able to make overpayments, contributing more than you’re asked by the lender and reducing the time that you’re in debt for. By overpaying and clearing your mortgage early, you’ll pay less interest overall.

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Capped rate mortgages are variable mortgages that have an upper-interest cap. Though your interest rate might fluctuate, with a capped rate it won’t go above a certain level. Capped rate mortgages provide some financial security.

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Capped rate mortgages are variable mortgages that have an upper-interest cap. Though your interest rate might fluctuate, with a capped rate it won’t go above a certain level. Capped rate mortgages provide some financial security.

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With a tracker mortgage, your monthly payments will fluctuate. Your interest rate will rise and fall, influenced by several factors, which could work in your favour or mean that you’re charged more through your mortgage term.

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Discounted rate mortgages are variable mortgages with temporarily reduced interest rates. For a short time, usually a term of around two years, they’re cheaper than a mortgage lender’s standard variable rate.

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A Standard Variable Rate (SVR) mortgage has interest rates that rise and fall. You could benefit from interest rates dropping but might also see an increase in how much you pay every month.

Category: Mortgages Main

With a fixed-rate mortgage, your interest rate will stay the same for an agreed length of time. This makes mortgage payments much more predictable and can work in your favour or against you.

Category: Mortgages Main

An interest-only mortgage is one borrowing option and is certainly not the most popular, but could suit your needs if you’re purchasing a buy-to-let property.

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With a repayment mortgage, your payments every month will cover the interest that you owe. They’ll also clear some of your mortgage capital, reducing your overall debt.

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How Can Money Savings Advice Help You With A Mortgage?

Here at Money Savings Advice, we have partnered with some of the UK’s leading mortgage brokers. They have already helped thousands of people get the best mortgage deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a mortgage unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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