The housing market has seen a turbulent period of late, due to the rise of the bank of England base rate and rising house prices making it difficult for those looking to remortgage their property or join the property ladder. This situation largely stems from the war in Ukraine, COVID and  UK's energy price cap rise.

Despite this, there are still some opportunities available for those looking to fix their mortgages now - many lenders are offering fixed rate deals which could give you peace of mind for the next 2, 3 or even 10 years.

Why should you consider a fixed rate mortgage?

If you have a fixed rate mortgage then your mortgage repayments won't change for a set period. This may provide you with the stability and comfort to allow you to plan and budget. You are guaranteed to pay the same amount each month even with rate rises, this also means you won't benefit from rate drops either.

Before you go ahead and lock in your fixed rate mortgage, it’s important that you consider the implications of doing so. Although fixed rate deals may look attractive, they may not be the right option for everyone. If you are looking to fix your mortgage, there are a few key aspects that must be taken into consideration.

• Are you planning on moving?
• Are you locked into a fixed-rate mortgage with your existing lender and would face an early repayment charge if you decided to exit early?
• Are you looking to make a large payment off your mortgage in the near future?

If you have considered these factors and have decided that now is a good time to fix your mortgage rate, you must shop around to find the best deal. Make sure you compare different lenders and products available on the market so that you get the most competitively priced deal for your circumstances. A product transfer with your current lender may also be the best deal for you. 

Mortgage rates can be unpredictable, making it difficult to determine whether a fixed rate mortgage is the best choice for you. Therefore, it's important that you weigh all of your options before deciding which type of loan is right for you. All types of mortgages should be considered including fixed rate mortgages, tracker mortgages and variable mortgages.

How long should I fix my mortgage deal?

Depending on your particular circumstances, the period you chose to fix in for will vary. Whether you're a first time buyer or looking to remortgage you should weigh up fixing in for a longer period or a shorter one.  You should also consider the advantages and disadvantages of fixing first.

Advantages

• Ability to budget as monthly payment doesn't change
• Protection against interest rises
• You can secure a low rate if rates are low

Disadvantages

• You won't benefit from rate drops
• An early repayment charge (ERC) may be payable if you exit your deal early
• Restrictions on overpayments

Once you have decided that fixing your mortgage is the best option then you need to consider how long for. There are several aspects you need to consider including:

• How long you want to live in the property for
• Do you have any changes in circumstances that will affect your ability to pay your mortgage if rates were to rise
• Will you want to pay any large sums of money off your mortgage which may trigger early repayment charges or change the loan to value LTV
• Do you mind paying more/less if rates drop/rise
• The interest rate that you can currently secure and the overall cost

If you are looking to live in your property long-term then fixing in for a longer period may be beneficial for you. However, if you are looking to reside at the property for a shorter period of time or can only qualify for a higher interest rate (but still lower than variable products) then fixing in for a shorter period may be a better option for you.

If interest rates fall during your fixed term, you won't get the benefit from this but on the other hand, if interest rates rise this won't affect your monthly mortgage payments either. Choosing a fixed rate mortgage means your monthly repayments will stay the same and not fluctuate during this period, this makes it easier for you to budget monthly and organise your finances.

Being fixed into your mortgage means your payments will stay the same throughout the length of this term, this also means if you remortgage or move house during this term there will be additional costs such as early repayment charges or exit fees, this is only recommended if it's necessary, it is always best to wait until your fixed period ends.

If you decide a fixed mortgage isn't the best option for you then there are other options to consider, for example, a tracker mortgage.

What happens when my fixed rate mortgage deal expires?

When your initial rate period ends, so will the fixed rate monthly payments. You'll still have the same loan, but instead of a fixed interest rate, you'll be subject to the lender's current standard variable rate (SVR). The lender's standard variable rate is typically higher than your fixed rate unless your original mortgage was taken out during a time of high interest rates and the Bank of England's base rate has dropped. Prior to this, it is best to review your mortgage options again and find the best new deal for you.

How to get the best fixed-rate mortgage deal?

Choosing the best mortgage deal for you is about considering all your options. An independent mortgage broker can search the whole of the market to find the best fixed rate deal for you and help you submit your mortgage application and secure a new rate.

If you are unsure about whether you should fix your mortgage or not, call us on 0151 662 0188 or email [email protected].