To fix or not to fix your mortgage rate…and for how long?

16 May 2022

In uncertain times fixed monthly outgoings can offer some peace of mind.

Fixing the payment on your biggest monthly expense would be a great start. But is it a good idea to fix your mortgage rate and for how long?


What is a fixed-rate mortgage?

A fixed-rate mortgage is exactly what you’d expect it to be. The rate is fixed at a certain percentage for a set period. You are tied into this product for the length of the offer. After that time, you are usually free to move to another deal or you will move to the lender's standard variable rate (SVR) for the remaining term of the mortgage.

This means the rate and therefore the payment will not change for that time, no matter what happens to interest rates in general. If the Bank of England rate moves either up or down this will not have any effect on the payment you make each month.


How long should you fix it for?

For many years customers enjoyed increasingly declining rates making a 2 or 3 year fix a good fit. This offered the certainty that your monthly payment would remain the same and the scope to shop around for a new, possibly cheaper, deal after a relatively short fixed term.

Traditionally lenders offer 2, 3 and 5 year fixed, but 10 year fixed are becoming increasingly available. The longer the fixed term the less favourable the rate as they offer payment certainty for a longer length of time.

Whatever you decide there is always an element of risk. Fix for the long term and risk losing out if interest rates begin to fall. Fix for the short term and risk interest rates going up by the time your deal ends.


Expert Mortgage Advice

Talking to a broker is the best place to start. Brokers have experience in the past market; they have the inside track on the products lenders are offering and how fast the landscape is changing and from this can gauge the market.

However, the truth of the matter is that no one knows what will happen in the future.

In the current market fixing somewhere in the middle at 5 years may be enough to weather the storm, whilst preventing you from being tied in for too long should the rates fall.

What we do know is that property is generally a safe investment with prices steadily rising over time. So, whatever you choose to do with your mortgage rate, property can often still be a safe place to put your money.


Call 0203 745 5893 to speak to one of the team or fill in the form below and we’ll be in touch with you to discuss your new mortgage deal.