Fixed rate mortgages

As the name suggests, a fixed rate mortgage has an interest rate that is fixed for an initial term - say 2, 5 or even 10 years. This means your monthly mortgage payment will remain the same over the period, giving you certainty and allowing you to budget for a major item of expenditure. At the end of the fixed rate period, the mortgage usually transfers to the lender's variable rate - although it makes sense to shop around at this point to secure the best deal. To compare the UK's best fixed rate mortgage deals, have a look at our independent best buy tables. We have all the latest rates and those all-important terms and conditions.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Two Year Fixed rate mortgages - Ordered by lowest initial rate

    • Provider

      HSBC

    • Rate Type Fixed
    • Initial Rate 1.49% then 3.94%
    • Initial Period Until 28/02/2017
    • Max LTV 60%
    • Product Fees Yes
    • Go to site

      Phone

      More details

    2014 SUPERS

    The winners of the 2014 ‘Supers’ award for the Best mortgage provider

    Great for
    Max loan amount £500,000
    Ability to make overpayments up to 20% of your standard monthly payments without early repayment charge
    But be aware that
    £1,999 booking fee applies
    Payment holidays are not available
    Requires 40% deposit

    Overall cost for comparison 3.7% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  1. Great for
    Min – max loan amount £25,001 - £5 million
    Ability to make overpayments of up to 10% per year
    Payment holiday is available
    But be aware that
    £1,545 Completion Fee applies
    £130 Arrangement Fee applies
    Requires 35% deposit

    Overall cost for comparison 5.1% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  2. Great for
    Min – max loan amount £10,000 - £1,000,000
    Ability to make overpayments
    But be aware that
    £1950 Booking Fee applies
    Payment holidays are not available
    Requires 35% deposit

    Overall cost for comparison 3.5% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  3. Great for
    Min – max loan amount £25,001 - £5 million
    Ability to make overpayments
    Payment holiday is available
    But be aware that
    £845 Completion Fee applies
    £130 Arrangement Fee applies
    Requires 35% deposit

    Overall cost for comparison 4.5% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

Three Year Fixed rate mortgages - Ordered by lowest initial rate

  1. Overall cost for comparison 3.5% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  2. Overall cost for comparison 4.9% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  3. Overall cost for comparison 4.4% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  4. Overall cost for comparison 4.1% APR. This is the cost of the mortgage over the whole term.  No early repayment charges apply.

Five Years and Over Fixed rate mortgages - Ordered by lowest initial rate

  1. Overall cost for comparison 3.5% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  2. Overall cost for comparison 4.7% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  3. Overall cost for comparison 4% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

  4. Overall cost for comparison 3.8% APR. This is the cost of the mortgage over the whole term.  Early repayment charges may apply.

Guide to fixed rate mortgages

Picking from the wide range of mortgage options available can seem a daunting task. With thousands of products available, how do you know which one to go for?

Broadly, mortgage deals fall into two categories - variable and fixed rate. Here we explain how fixed rate mortgages work, and how to pick one that's suitable for you:

What is a fixed-rate mortgage?

These are mortgage deals that offer you the chance to secure your rate to give you fixed monthly repayments. By choosing one of these, you don't need to fear fluctuations in interest rates. The rate will remain the same over the specified period, no matter what happens to the Bank of England's base rate or lender's standard variable rate (SVR).

A fixed-rate mortgage usually lasts for two to five years, although there are longer terms on the market of ten years or more. At the end of the deal the fixed-rate period the rate will revert to the lender's SVR.

Advantages

A fixed-rate gives you the security of knowing exactly how much you'll pay for your monthly mortgage repayments, irrespective of what happens to interest rates.

This means you can budget for other household costs more easily, without fearing your mortgage repayments could suddenly shoot up.

For first-time buyers or homeowners on a tight budget, fixed-rate mortgages are particularly appealing, as they provide a stable, monthly repayment.

Disadvantages

You typically face paying a fee when arranging your fixed-rate mortgage, and rates can be higher than variable options. This is because you're paying for the security they offer, as variable rates can change, so if the Bank of England puts interest rates up, variable rates will rise while a fixed rate will remain the same.

You may miss out on a more competitive interest rate if the lender's SVR drops to less than the fixed rate.

It's important to think carefully about how long you want to lock yourself into a mortgage for. Most will charge you a penalty - known as an early repayment charge (ERC) - if you need to get out of the deal before the end of the fixed term.

Choosing a fixed rate

Consider how long you want to fix your rate for. There are plenty of deals available on the market, ranging from two to five or more years, but there is a big difference in the time these will fix your mortgage repayments for.

The decision depends on how important this security is for you, and what you think will happen to the Bank of England base rate. For example, you may want to set your repayments for five years, but this will see you miss out on a cheaper deal if rates have further to fall. Alternatively, if they rise, you'll be glad you locked into a fixed-rate deal.

Check how big a deposit you need to have to access the best deal, as many of the cheapest fixed rates will only be available to those with a large deposit of 40% or more. If you have a smaller deposit, then your choice may limited. Look at the maximum Loan to Value (LTV) ratio on offer from each mortgage to work out if you can apply.

Comparing fixed rate deals

Once you know how long you want to fix your mortgage and how big a deposit you have, you can search fixed mortgage rates to find the best and most suitable deal for you.

While you will want to compare interest rates, given this is the determining factor in how much your repayments will be, this isn't the only consideration. Lenders charge a range of fees for mortgage deals, so check out how much these amount to as it can play a large part in which deal is best for you over a certain time period - particularly if there is little difference in rates.

MoneySupermarket makes it easy to choose the right fixed rate mortgage. There is a wide range of mortgages from a variety of lenders, but we make it easy for you to compare them. What's more, our comparison service is free, independent and online.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The figures and information provided by this tool are for illustration purposes only

Looking for mortgage advice?

You can get mortgage advice, including deals from the whole of market, totally free from broker London & Country – just give them a call on 0800 073 1943 from a landline for free or 0333 123 1943 from a mobile at local rate, seven days a week.
Lines open 9am-8pm Mon-Thurs, 9am-5:30pm Fri & Sat, 10am-4pm Sun.

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