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Fixed Rate Mortgages

Explore the ins and outs of fixed-rate mortgages. Discover their potential benefits, drawbacks, and whether this kind of mortgage could be just what you need.
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    What is a fixed-rate mortgage?

    A fixed-rate mortgage is one of many types of mortgage available. The main selling point of a fixed rate mortgage is that the interest rate remains the same for a set period of time. This provides borrowers with certainty and stability in their monthly mortgage payments. Unlike variable-rate mortgages, which are tied to the Bank of England base rate, fixed-rate mortgages offer the security of a fixed payment regardless of market fluctuations.

    How long can you fix the interest rate for?

    Borrowers can choose to fix their mortgage rate for one, two, three, five, seven, 10, or 15 years. However, the interest rate for longer-term fixed-rate mortgages tends to be higher than those with shorter fixed periods. This is because lenders need to factor in the uncertainty of market conditions over a longer period of time.

    For a more indepth guide on the length you fix your mortgage for read: how long should I fix my mortgage for?

    Should I fix for 2 or 5 years?

    The two most common fixed-rate periods are two and five years. Two-year fixed-rate mortgages offer more flexibility for borrowers who want to move or remortgage in the near future. On the other hand, five-year fixed-rate mortgages offer longer-term security but are generally more expensive. Borrowers should consider their individual circumstances and consult with a mortgage adviser to determine the best fixed-rate period for them.

    Fees and charges on fixed-rate mortgage deals

    In addition to the interest rate, fixed-rate mortgages come with up-front fees, early repayment charges (ERCs), and restrictions on overpayments. Up-front fees can vary significantly depending on the lender, with fees typically ranging from £999 to £1,999. Early repayment fees are charged if borrowers pay off their mortgage before the end of the fixed-rate period, with charges typically starting at around 5% of the outstanding balance and decreasing over time. Borrowers should also check the terms of their fixed-rate mortgage regarding overpayments, as some mortgages restrict overpayments to a maximum of 10% of the balance each year.

    What happens when the fixed period ends?

    At the end of the fixed-rate period, borrowers will be transferred to their lender’s standard variable rate (SVR), which can be significantly higher than the fixed rate. Borrowers should consider remortgaging to a new deal with their current lender or another provider before being transferred to the SVR. This can be arranged up to six months before the end of the fixed-rate period.

    Should I leave a fixed rate mortgage early

    Considering ending your fixed-rate mortgage early? You must be aware that most fixed rate deals incur Early Repayment Charges. Therefore, it is critical to review the terms of your agreement and make sure you understand what charges could apply depending on which mortgage lender you have your fixed rate deal with.

    Before opting to break your current fixed-rate deal and switch to a new one, it is vital that you make sure the new deal will be worth any fees or charges associated with remortgaging.

    Calculate how much overall savings on your mortgage payments you can accrue by remortgaging in order to determine if the move would be beneficial for you financially. Before deciding to exit your fixed-rate deal early, it’s essential that you consider what the future holds for you. For example, if you’re thinking about relocating in the next few years, leaving your current mortgage may not be worth it as it could lead to more costly fees. Ultimately, deciding to break away from your fixed-rate mortgage is a big decision, and it’s vital that you seek professional advice.

    Our team of experienced advisors at YesCanDo understand how most fixed rate mortgages work and will be there every step of the way so you make an informed decision. With their expertise you may be better suited to going onto a variable rate mortgage or possibly to a tracker mortgage.

    Getting the best fixed rate mortgage deal with the help from YesCanDo

    Are you looking for the best fixed-rate mortgage deal? Then let YesCanDo guide and assist you through this complicated process! Our team of experienced mortgage advisors are dedicated to helping customers find the perfect home loan that fits all their needs and budget. Don’t worry about feeling stressed or overwhelmed, because with our specialised advice, we can make it a hassle-free experience!

    When you let YesCanDo help, your experience will be focused and personalised. Our team of experts will take the time to understand your finances and aspirations before offering our expert advice on which fixed-rate mortgage deals are best suited for you. With this approach tailored to meet your individual needs, you can rest assured that choosing a mortgage deal has never been easier!

    YesCanDo understands that a mortgage is an incredibly important investment, and they strive to ensure you receive the best possible deal. With access to exclusive offers of lenders not accessible through high street banks – plus their extensive range of other options- YesCanDo will help guide you toward the most optimal loan with competitive interest rates and beneficial terms available.

    Whether you are looking for a fixed rate mortgage or tracker rate mortgage; by partnering with YesCanDo, you can save time, and money and spare yourself stress when seeking a great fixed-rate mortgage deal. Our experienced and professional advisors will tackle the laborious paperwork and chasing for you to ensure your experience is as effortless as possible.

    Frequently Asked Questions

    Well, it all comes down to your individual circumstances and preferences. On the one hand, a fixed-rate mortgage can give you peace of mind knowing exactly how much you need to repay each month for a set period of time. But on the other hand, if interest rates fall during your fixed term, you may miss out on the opportunity to benefit from lower rates. And if you want to switch or pay off your mortgage early, you may have to pay a penalty fee.

    As of March 10th, 2023, the average two-year fixed-rate mortgage rate in the UK is 5.10% (based on 75% loan-to-value ratio), while the average five-year fixed-rate mortgage rate is 5.40% (based on 75% LTV). But keep in mind that these rates can vary depending on your credit score, income, deposit size, and other factors.

    If you’re in search of a competitive fixed mortgage deal the process can be long and challenging. It’s true that some websites offer quick comparison tools for fixed-rate mortgages, yet consulting a broker or advisor is often wise. They have access to multiple lenders’ deals and incentives which enables them to provide tailored advice designed specifically around your needs.

    The beauty of a fixed-rate mortgage is that your interest rate remains consistent for the chosen timeframe, usually ranging from 2 to 5 years. This provides you with peace of mind knowing that any changes in rates—whether it be Bank of England base rate or lenders’ standard variable rate (SVR)—will not affect what you pay each month during this period.

    Everyone’s personal financial situation is unique, thus the answer to this question varies. That being said, opting for a fixed-rate mortgage comes with some advantages: you will know exactly how much your monthly payments are going to be; you can guard yourself from any potential increase in interest rates during the period of your agreement; if current trends point towards future rise in these rates – locking them now at a lower rate than SVR might save you money down the line. However, some drawbacks include potentially paying more than the SVR if interest rates fall during your fixed term, having less flexibility and choice if you want to switch or pay off your mortgage early, and higher upfront costs such as arrangement fees or valuation fees compared to variable-rate mortgages.

    As mentioned earlier, some of the downsides of a fixed-rate mortgage include potentially paying more than the SVR if interest rates fall during your fixed term, having less flexibility and choice if you want to switch or pay off your mortgage early, and higher upfront costs such as arrangement fees or valuation fees compared to variable-rate mortgages.

    There’s no definitive answer to whether a fixed or variable mortgage is better, as it depends on your personal circumstances and preferences. A variable mortgage may be better if you want more flexibility and choice in switching or paying off your mortgage early without penalty fees, expect interest rates to fall or stay low in the future and want to benefit from lower mortgage repayments, or can afford higher monthly repayments if interest rates rise unexpectedly. A fixed mortgage may be better if you want peace of mind knowing how much you need to repay each month for a set period of time, want protection from any interest rate rises during your fixed term, or expect interest rates to rise or stay high in the future and want to lock in a lower rate than the SVR.

    The best term for a fixed-rate mortgage is subjective and depends on your personal circumstances and preferences. Generally speaking, shorter terms such as two years offer lower interest rates but less stability, while longer terms such as five years offer higher interest rates but more stability. The best term for you will depend on factors such as:

    • How long you plan to stay in your property

    • How much risk you are willing to take with interest rate fluctuations

    • How much you can afford to pay each month

    • How much you want to save on interest over the lifetime of your mortgage.

    It’s also worth considering that some lenders may offer fixed-rate terms beyond five years, such as seven or ten-year terms. While these may offer even greater stability, they may come with higher interest rates and fees. As with any mortgage decision, it’s important to do your research and compare different options before making a choice.

    What is the average 5 year fixed mortgage rate today UK?

    Mortgage rates change weekly, especially during the start of 2023 in wake of the base rates rising. However, at the time of writing 1oth March 2023, the average five-year fixed-rate mortgage rate in the UK is 4.73% based on a 75% loan-to-value ratio. However, it is essential to bear in mind that these may shift depending on your credit score, income, deposit size, and other factors. You could discover a more competitive fixed-rate deal and lower monthly payments by comparing different lenders and brokers both online and offline.

    When it comes to deciding whether a two or five-year fixed mortgage is the best option for you, there’s no clear cut answer as your situation and preferences must be taken into account. That said, if you do opt for a two year fixed loan, some of its benefits include:

    • Unlock the potential of lower rates than a five-year fixed mortgage and reap the rewards.

    • If interest rates drop or your finances take a turn for the better, you can quickly find yourself with an improved deal in no time.

    • With a fixed-rate mortgage, you’re safeguarded from potential interest rate increases.

    Some advantages of getting a five-year fixed mortgage are:

    • A mortgage with a fixed rate of two years or more provides you with improved financial stability and security.

    • You can avoid the hassle and cost of remortgaging every two years

    • You can protect yourself from interest rate rises for longer than a two-year fixed mortgage.

    Ultimately, the best option will depend on your financial goals, risk tolerance, and overall financial situation. It may be helpful to seek the advice of a professional mortgage adviser to determine which option is best for you.

    While it’s possible to compare mortgage rates and deals on your own by using mortgage comparison websites, it can be challenging to navigate the complexities of the mortgage market. That’s why it may be a good idea to use a mortgage broker or adviser who can help you find the most suitable mortgage for your needs and circumstances.

    A mortgage broker is your go-to for all of the best mortgages from various lenders—even those you may not be able to access without their help! Furthermore, they can explain every fee and charge associated with each loan option in detail so that you are entirely aware of how much it will cost in the end. It’s vital to have this information before making a decision, as these charges could significantly alter the total cost of your mortgage.

    Additionally, a mortgage broker can provide valuable insight on the best loan for your particular needs. They consider your financial targets, credit score, income level, deposit amount and more to assist you in saving time and money by offering the most beneficial mortgage deal available. With their expertise guiding you every step of the way – they are an invaluable asset when searching for a new home or refinancing an existing one!

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