Are you looking for a mortgage? A fixed-rate mortgage might be the right choice for your needs. Fixed-rate mortgages have interest rates that stay the same, so there are no surprises with your monthly repayments. It’s worth considering which type of fixed-rate mortgage is best for you and what happens when they end. Read on to find out more!

What is a fixed rate mortgage?

In a fixed-rate mortgage, the interest rate remains the same for a set period of time. The length of this agreement can be from two to 15 years, with longer-term products available from a few lenders that last the term of the entire mortgage.

Fixed rates can be useful for budgeting.

If the market changes then fixed rates do not change so your monthly repayments will not change.

What are the different types of fixed rate mortgage?

There are different types of fixed-rate mortgages, depending on how long the interest rate is fixed for:

• Two years

• Three years

• Five years

• Seven years

• Ten years

• Fifteen years

• Fixed for term

Depending on your needs and circumstances a mortgage broker would advise you on what is the most sutiable rate. The interest rate charged will vary between the different rate terms with the shorter fixed rates being lower cost and the longer fixed rates being higher cost. This is becuase the lender has to garuntee that rate for a longer period so they take a greater risk that the rates will rise. Lenders will also have different i terest rates depending on the loan to value

What happens when the fixed rate ends?

When your fixed-rate mortgage ends, your interest rate will revert to the lender’s standard variable rate. This is usually a higher rate than the fixed rate you have been paying (but not always), so it’s important to consider what this will mean for your monthly repayments.

When you finish your fixed rate you would tend to review your options at that time and provided you are not moving house then typically you would have two options in order to be able to obtain another competitive rate rather than staying on the standard variable rate.

– Remortgage (Move your mortgage to a new lender)

– Product transfer (Transfer onto a new rate with your existing lender)

Your lender will usually send you a letter roughly three months before your rate ends to remind you that you will transfer onto the lender’s standard variable rate. Our process as mortgage brokers will be to contact our clients 5 months prior to the rate finishing, this is so we can be ready in good time, most lenders will offer new mortgage terms for 6 months so everything can be agreed in advance.

Mortgage Early Repayment Charges (ERCs)

This answer really depends on the lender and your personal circumstances. Some specialist lenders will want you to have a deposit of at least 15%, most high street banks will accept 10% but with increased rates, and others will go as low as 5%. For example, if you were looking at a £400,000 house in Kent then the minimum deposit required would be £20,000. If you can save more then this will only increase your chances of being accepted for a mortgage and could also lead to a better interest rate. There are also government schemes such as the help to buy equity loans that can help you increase your deposit.

Momentum Mortgages are mortgage brokers based in Sevenoaks, Kent. We help people to buy, invest or remortgage property while reducing stress and saving time. We have helped clients all over Kent including Tunbridge Wells, Tonbridge, Maidstone, Swanley, Dartford, Bromley, Orpington and more.