First things first. A fixed mortgage offers the same interest rate for the duration of the agreed term, typically 2, 3 and 5 years. Some mortgage providers will also occasionally have 1, 7 and 15 years fixed. It means that your payments don’t change during that time and aren’t affected by Bank of England interest rate changes, or other factors. You can manage your finances better as you know what you’re paying each month. If market rates increase, your rate doesn’t change. On the other hand, you wouldn’t benefit if rates fall.

It’s very much a personal decision based on your circumstances, preferences, and plans. Fixing your mortgage can provide stability with your monthly payments so it’s a good way of budgeting and protecting yourself from market fluctuations.

On the other hand, if you’re thinking of moving, anticipating a large inheritance, or considering increasing your borrowing in the not-too-distant future, it may be not the right option for you. This is because you may have to pay an early repayment charge to redeem the loan during the fixed rate period, or because your existing lender might not do what you’d like or need them to do.

It completely depends on your plans and needs. You need to consider whether you may want to move soon, change jobs, your financial situation as well as the wider economic and market conditions, such as interest rates going up or down, to decide the ideal time to fix your mortgage.

This is where our expertise comes in useful. To help you make the best decision for you, we’ll review your personal circumstances and look at market trends and mortgage lenders offers. 

This also depends on your personal circumstances. You may be looking to move soon or repay some of the borrowing earlier – that can determine how long to fix for. In most cases, you’d want to avoid paying early repayment charge. As an example, if you’re looking to move in the next 2 years, you wouldn’t necessarily want to fix for longer than that.

The most popular fixed periods are 2, 3 or 5 years. At the end of each period, you will have more options to reassess your situation, without paying the early repayment charge. Some of our clients fix for 10 years. This could be great for budgeting, and shielding yourself against rate rises, but you wouldn’t benefit from interest rates going down.

The early repayment charges are based on a percentage of the loan at the point you repay the mortgage. This could be because you’d like to switch provider, need a different lender or are using gifted or inherited funds to repay the mortgage.

Early repayment charges typically last for the duration of the fixed rate period, although they are generally ‘tapered’. This means that the early repayment charge might start at 5% on a 5-year fixed rate in year 1, dropping to 4% in year 2, 3% in year 3, and so on.

To illustrate it better, imagine your mortgage balance is £150,000 when you want to repay it in full in the first year of the fixed rate. If your early repayment charge is 5%, the amount you would pay the lender would be £7,500.

On a 10-year fixed rate, you might expect as much as 10% in the first year. If you have plans to change your situation or your mortgage within 10 year period, a shorter term fixed rate might be the better option.

At the end of your fixed rate, if you don’t do anything, you’ll move onto your lender’s variable rate, known as standard variable rate or SVR. This is almost always higher than your fixed rate and means your monthly payments will go up.

If you’re one of our clients, we’ll contact you well before your fixed rate ends to ensure we can reassess your needs together, explore your mortgage options and avoid you moving onto SVR (unless you want to).