What does Fixed Rate Mortgages mean?

A fixed rate mortgage’s first advantage is that you get acknowledged with a plan which’s terms do not change, more exactly you will know from the very start how much you will have to pay for the monthly installments and for how long. However, the UK real estate market offers few such convenient mortgage plans, and most of the time you will find a combination of fixed and variable rate mortgage options.

For example, at Halifax mortgages, if you want a plan of a fixed rate mortgage where the loan to value is up to a maximum of 75%, because perhaps this is the most popular type of mortgage lending, plus most of the lenders do not agree to lend more than that, here is what you can get:

• Given the example you contract a ten year fixed rate mortgage this year (2009), where the loan to value is up to a max. 75%, your start rate is a required 5, 69%, your rate ends in 2019. The loan does not exceed £500,000


• The fine print states that the remainder of the mortgage term you will have to pay a constant 3, 50% standard variable rate.


• The fee you have to pay for the respective package offer is £995, fee which you can actually add on to your mortgage, but don’t forget that if so, this fee also becomes subject to paying interest.


• On every product which has very convenient terms and conditions, there will be some restraints tailored, and in this case if you decide to pay off you mortgage in the first 6 years from the 10 over which actually the mortgage has to stretch, you will pay an early redemption fee of 5%, and if it is paid off in the first 7 years then the fee is 4%. As seen, it is not convenient at all to contract this type of loan unless you commit yourself to the payment schedule.