If the possibility of your mortgage payment changing each month worries you then you could consider going for a fixed-rate deal.

Fixed rate mortgages give you a guaranteed unchanging monthly payment for an agreed period of time usually between 1 and 10 years. During that period, your interest rate will remain unchanged, as will your monthly payments, whatever happens to other interest rates.

Great Security

This approach provides a great deal of security. You already know what you will be paying each month, so when you take out the mortgage you can choose an amount that you know you can afford without having to worry about leaving room for it to go up if interest rates change.

Possible Costs

Fixed rate mortgages often offer excellent value and very competitive interest rates, but they do have two potential downsides:

Falling Interest rates

Even if general interest rates are falling, yours won't, so you could end up paying more than you need to. However, you would have to be quite unlucky to be significantly affected by this, and it is just as likely that interest rates will go up, in which case you will be benefiting as your rate will not change.

Fees

The fees relating to fixed rate mortgages can be quite high, especially if you want to pay off your mortgage or sell during the fixed period. It is common for quite large early repayment or redemption fees to be charged if you wish to do this.

You should check what fees apply if you need to sell during the fixed period before you sign up to a mortgage. You should also check if any early repayment or redemption fees will apply after the fixed period ends a EUROS these are known as overhanging lock in fees and are best avoided if possible. Only some lenders charge overhanging fees.

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