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Should you get a fixed rate mortgage?

Last updated: August 24, 2022

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When it comes to mortgages, there can be a lot of different terms to wrap your head around. ‘Fixed rate mortgage’ is one that you will hear a lot and it’s a really important one to understand. In this blog, we’re going to break it all down so you can work out if a fixed rate mortgage is the best option for you.

We are currently in a phase where interest rates are rising so it’s worth reviewing the current market and making sure that you are on a mortgage rate that works for you now and for the foreseeable future. It is often the case that a great rate can be available today but gone by tomorrow so we are encouraging our clients to act now to secure the best possible rates before they increase further.

What is a fixed rate mortgage?

Some mortgage products have variable interest rates. This means that the interest rate tracks the base rate set by the Bank of England. So, if the Bank of England base rate goes down, you won’t pay as much interest that month (great!). BUT if the base rate goes up (as it is at the moment), you will start to pay more interest (Not so great!).

The alternative to a variable rate mortgage is a fixed rate mortgage. This means that the lender commits to a fixed interest rate for a specified length of time (usually 2-5 years). This rate is not linked to the base rate so your mortgage payments don’t change regardless of what is going on with the base rate.

A fixed rate will give you certainty

Everybody’s talking about rates rising. And so they should be! In recent months, the Bank of England have been progressively increasing the base rate and, as a result, mortgage lenders are protecting themselves by increasing their rates also.

With a fixed rate mortgage you know, with certainty, that your rate will not increase should there be a future rate rise. So essentially, you are protected and can plan your finances knowing that you will pay the same amount each month for your mortgage.

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A fixed rate will help you budget for renovations

If you’re embarking on a project to refurbish your new home, you will be needing to make a budget to keep track of all the expenses. It will help enormously to have an exact figure each month so you know how much paint you can afford to buy (why is paint is sooooo expensive?!) and a fixed rate mortgage will help with this.

A fixed rate mortgage isn’t necessarily best for everybody

Some people will need flexibility with their mortgage and won’t want to be tied in to a fixed rate for a given period of time. Flexibility is not a word associated with fixed rate mortgages. If you think there’s a chance that you might want to sell your property in the next couple of years, or perhaps you’re considering changing it to a buy-to-let, or remortgaging to raise funds for renovations. Whatever it may be, if you have a potential change in circumstances on the horizon, it might not be the best plan to tie yourself into a fixed rate. There will usually be a pretty hefty Early Repayment Charge (ERC) to be paid if you want to get out of the rate before the agreed end date.

So, should I get a fixed rate mortgage?

Remember that everyone’s situation is different so just because your friend/brother/auntie didn’t fix, doesn’t mean you shouldn’t. The best thing to do is to get some expert mortgage advice from someone who really knows all the lenders and understands the little quirks and unique requirements that each one has.

At Hudson Rose we are a merry band of mortgage advisors who pride ourselves on being super-approachable. We take our time with every client to make sure that we really know you and understand what’s best for you in terms of your mortgage needs. If you’d like to chat through your situation, an initial chat is completely free so give us a call today on 0330 122 9920 or click here to book an appointment with one of our advisors and let’s get the ball rolling.

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While you’re here, check out some more handy blogs from the Hudson Rose team!

5 ways to beat mortgage interest rate rises

How can you find the best mortgage advice in Cirencester?

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Hudson Rose Services Ltd is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority.
Hudson Rose Services Ltd, trading as Hudson Rose. Registered Office: 7 Bridge Street, Nailsworth, Stroud, GL6 0AA
Registered Company Number: 11008147 Registered in England. FCA 799302

Hudson Rose Services Cirencester Ltd, trading as Hudson Rose. Registered Office: 78 Dyer Street, Cirencester GL7 2PF Registered Company Number: 13349772 Registered in England

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