What is a Fixed Rate Mortgage?

As the term implies, with a fixed rate mortgage the mortgage rate is fixed for a set period of time, so no matter what movements occur in the lender's standard variable mortgage rate, the borrower's arrangement is fixed and, therefore, so are the monthly fixed rate mortgage payments.

A fixed rate mortgage would suit someone who likes to know where they stand. A fixed rate mortgage, as suggested by the name, is a mortgage where equal repayments are made every month.

Fixed rate mortgages allow you to easily manage and plan your monthly expenditure - because the payment will be the same every month and you won't be affected by any rises in the base rate. If the interest rates rise above the fixed rate on your mortgage, you will see the real benefits of the fixed rate mortgage.

A fixed rate mortgage makes it easy to plan ahead, because as the name suggests, the interest rate on your mortgage stays fixed.

This means that as a fixed rate mortgage customer, even if the Bank of England Base Rate changes, the interest rate on your mortgage remains constant over a fixed period of time. This makes your budgeting easier, because you can plan ahead knowing exactly how much your monthly repayments will be.

The fixed rate period can be anything between six months and five years, but it's always best to refer to a financial services professional before deciding what period of fixed interest rate to choose.

The biggest advantage of a fixed rate is that irrespective of fluctuations in interest rates, your monthly repayments remain the same throughout the period of the fixed rate - usually six months to five years.

A fixed rate mortgage is suitable if your mortgage repayments take up a large proportion of your income as it protects you from rises in interest rates. However, you would not benefit from any reduction in the lenders standard variable rate.

Fixed rate mortgages generally incur a penalty if redeemed within the fixed rate period.

The advantage of a fixed rate mortgage is that you know exactly how much your mortgage will cost, and for how long. If interest rates on your mortgage rise, well the fixed rate will not. Conversely, however, when mortgage rates drop, your fixed rate mortgage will not drop with them.

The key benefit of a fixed rate mortgage is that you are able to accurately budget your repayments for a set period of time. In addition, fixed rate mortgages are an excellent option, if it becomes apparent that interest rates may be rising over the coming years, as you can protect your mortgage repayments against rises by choosing a fixed rate mortgage.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

---

How Homeowner Can Save Their Home From Foreclosure

Drive around and see how many signs you see that... Read More

Doing a California Refinance Online

Californians are passionate people. I know. I have lived in... Read More

Tips For First Home Buyers On Getting Home Loans

Buying your first home will likely be the biggest and... Read More

First Time Buyers Fail To Shop Around

Almost two thirds of first time buyers accept the first... Read More

5 Home Buying Essentials

Purchasing a home involves certain important, even essential, steps that... Read More

Understanding Fixed-rate Mortgages

A fixed-rate mortgage is a mortgage on which the interest... Read More

Buying a Home With Bad Credit - Get Approved With a Recent Bankruptcy or Foreclosure

A few years ago, if you had a bankruptcy or... Read More

What Your Mortgage Lender Is Not Telling You About Accelerated Mortgages

For years, mainstream banks and financial advisors have been recommending... Read More

Buying a Home With Poor Credit Is Easier Than Ever

Buying a home with poor credit is easier than ever... Read More

Fixed Versus Adjustable Rate Mortgages

Which One Should You Choose?Choosing between a fixed rate loan... Read More

Keep Your Eye Focused on Treasury Bond Rates To Adjust Your Current Mortgage Rates

Mortgage rates typically are based off the current rates of... Read More

Ending Your Private Mortgage Insurance Early

Private mortgage insurance, or PMI, is the safety net of... Read More

How to Find the Lowest Rate Possible!

The quest is on! You're in the market for a... Read More

Stopping Foreclosures

If you as an investor understand the process, you will... Read More

What is a Current Account Mortgage?

Current account mortgages are fairly new to the sector. They... Read More

Homeowner Loans - Whats Available?

It isn't difficult to get a homeowner loan if you... Read More

Home Equity Loan ? Not Just For Home Repairs, And Tax Deductible, Too!

Thanks to the combination of low interest rates and skyrocketing... Read More

Applying for a Home Mortgage Loan Online - The Pros and Cons

If you have considered applying for a home loan mortgage... Read More

Refinance After Bankruptcy

Refinancing your mortgage after bankruptcy is actually the same as... Read More

Buy a Home With a Government Grant? Avoid this Scam

If you watch enough late night television, you'll see advertisements... Read More

High Risk Home Mortgage Lenders Online

Online high risk home mortgage lenders specialize in offering loans... Read More

Home Equity ? Let the Market Eliminate Your Private Mortgage Insurance

In decades past, most people who were interested in obtaining... Read More

Repayment of Loans ? Lessening the Bitterness of the Process

So how have you planned the repayment? Don't tell if... Read More

Home Equity Loans - How To Use Your Homes Equity to Consolidate Debt

If you've got a wallet full of credit cards, and... Read More

First Time Buyer Mortgages ? Transforming Homeless into Property Owners

Having just settled in life, you are finding the rentals... Read More

A Personal Mortgage Experience

I don't know what the mortgage situation is around the... Read More

What is the PayOption ARM?

Imagine an adjustable rate mortgage that allows you to pick... Read More

The Best Tactics for Getting a Quick Homeowner Loan

Trying to find a quick homeowner loan can seem difficult... Read More

Rates May Be Rising: Mortgage And Refinancing Preparation Made Simple For You

Buying a home is probably the single largest investment most... Read More

Construction Loan Basics

It might not be too big of an exaggeration to... Read More

Online Home Equity Loans: A Basic Glossary

Home equity loans can be a great idea for individuals... Read More

Choosing The Right Buy-To-Let Mortgage

Buy-to-let took off during the 1990s with the increasing availability... Read More

Refinance Home Loan and Refinance Home Loans

Refinance home loan lenders are eager to lend money to... Read More