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Fixed mortgage rates

Fixed mortgage rates are a popular choice with buyers and property investors. With a fixed rate mortgage, the interest rate on mortgage repayments is set for a ‘fixed’ period of time. This means the amount repaid by the borrower per month will not vary for this specified period.

74% of homeowners are currently on a fixed mortgage rate, making it the most common choice in the UK. 94% of new borrowers since 2019 have opted to take out this type of mortgage.*

About fixed rate mortgages UK

A fixed rate mortgage refers to the interest rate charged on the mortgage loan. Anyone on a fixed mortgage rate, will pay a set amount of interest per month with no variation in cost for a fixed time period.

The most commonly available fixed rate terms are 2 years, 5 years and 10 years. Other lengths of terms may be available depending on the policies of individual lenders.

A fixed rate mortgage can be useful in terms of financial planning as there is no concern that the monthly loan repayments will increase or decrease in pricing. It is however important to remember that at the end of the fixed term, the mortgage will automatically switch to the lender’s standard variable interest rate (SVR).

This can be beneficial in some cases, if the standard variable rate is lower at the time of the switch. If it is higher, it can be worth considering remortgaging to another fixed term rate or even another lender.

Mortgage advice for fixed rates

With any mortgage type, it is important to make a fully informed decision before committing.

As a mortgage is a very long-term commitment, it is best to speak to lenders or specialists to research and gather as much information as possible. A fixed rate mortgage is a popular choice but may or may not be the most appropriate choice.

 Some benefits of fixed rate mortgages are:

  • No price variations on repayments for a set time period
  • Widely available through most lenders
  • Allows for financial planning with monthly expenses
  • Lenders will offer varying deals meaning some very competitive rates
  • The borrower can choose the most convenient length of fixed term for their needs

Whether a fixed rate mortgage is best will depend on the borrower’s financial circumstances and why they have applied for the mortgage loan. In some cases, a variable rate may be a better choice but ultimately that decision lies in the hands of the applicant.

For our complete guide to getting a mortgage CLICK HERE.

For our guide on how long to fix your mortgage rates for CLICK HERE.

Mortgage broker for fixed rates

Fixed rate mortgages are readily available with lenders across the UK. This means that mortgage brokers and specialists will have dealt with hundreds if not thousands of these mortgage types – leaving them experts in this area.

We are no exception to this, with over 20 years experience in accessing the most competitive pricing for prospective homeowners and property investors.

For more information on securing excellent rates and terms for a mortgage, our team are readily available to share their knowledge and offer expert advice.

Best fixed rate mortgage

What is classified as the ‘best’ fixed rate mortgage will depend on the borrower’s needs and the terms of individual lenders.

Certain borrowers may prefer a shorter length of time for their fixed term period to allow for flexibility, in case a more suitable deal becomes available. Others may prefer the stability offered by a 5 or 10 year fixed rate.

The best practice would be to consider what is the most suitable for your situation and compare the rates various lenders offer. Comparison is always vital to finding the best possible deal available on the market.

Some lenders may be able to offer more preferable rates than others. This is especially true in the case of a remortgage, if borrowing again with the current lender. Lenders will usually be able to offer preferential rates for existing customers and a fixed-rate mortgage can be very beneficial in terms of financial planning.

For more information on how to remortgage your property CLICK HERE.

2 year fixed rate mortgage

A 2 year fixed rate mortgage is generally the shortest fixed term offered. This can allow for some level of flexibility as the borrower is not tied into this rate for as long as with a 5 or 10 year fixed term.

If better rates become available over the course of the 2 years, the borrower can remortgage and switch deals much more quickly without risking paying additional fees such as early repayment charges (ERC). This is also applicable if wanting to remortgage for any other reason such as to fund home renovations or consolidate debts.

It is sensible to remember that once the initial 2 year term is over, the interest rate on the repayments will switch automatically to the lender’s standard variable rate (SVR). This is important to consider as depending on the lender, this could then lead to higher monthly repayments moving forwards.

With a 2 year term, this may lead to considering a remortgage much earlier in the mortgage term than with longer fixed rates. This can be beneficial, but also time consuming due to completing a new application, property valuations etc.

If wanting to avoid considering a remortgage early on in the mortgage deal, a longer fixed rate mortgage deal may be a more suitable choice.

Best 5 year fixed rate mortgage

As the middle length of time available for a fixed rate mortgage, 5 years is a popular choice.

It still allows for the potential adjustment of the mortgage deal within the first few years of the mortgage. There is also the added bonus that the mortgage will have 3 more years at a set rate before being moved onto the lender’s standard variable rate (SVR).

This allows for a longer period of financial stability than with a 2 year fixed rate, which is beneficial in terms of longer term financial planning. This can be particularly helpful for landlords with buy to let mortgages for example, as they may have multiple properties and mortgages to manage.

Finding the best rate for a 5 year fixed rate mortgage will usually simply involve comparison. As fixed rates are the most commonly taken out mortgage type, lenders will be competitive with their pricing to try and appeal to as many borrowers as possible.

This means that with a bit of research it can be possible to secure an excellent rate, with several lenders as viable options.

10 year fixed mortgage rates

A 10 year fixed rate mortgage will usually be longest possible fixed rate term available. For those seeking financial stability, this can be an ideal choice as the fixed rate can cover a larger percentage of the overall mortgage term. This can even possibly cover the entire mortgage term, if you have managed to access a 10 year mortgage through a lender.

There are advantages and disadvantages that come with such a long term fixed rate. The borrower will be locked into a set rate for 10 years which means payments will not increase if the lender’s base interest rate rises during this time period. It does also however mean they will not benefit if the base rate decreases below the amount they are currently paying.

It is also important to consider that in order to access this mortgage rate, you will generally need a much larger deposit than standard – this can be up to 50% of the overall property cost with certain lenders. This will not be the case with every lender, so it is definitely worth comparing individual lenders and their policies.

This could be possible for investors with a lot of capital, who will benefit from stability and likely overall savings if interest rates do continue to rise.

Those looking to purchase residential property for their own residence may struggle to raise such a large deposit. This may still be accessible for some buyers if subject to an inheritance, such as a life insurance payment or profits from other investments.

Fixed rate mortgages for self employed

Fixed rate mortgages are a great option for those who are self employed, as at times their income can be more unpredictable. This is especially true if freelancing or for those running their own business.

A fixed interest rate allows a sense of security as it is always possible to plan for how much their monthly expenses will be in terms of mortgage repayments. As long as their income covers that set amount, the mortgage is safe and there is no risk of repossession.

This is especially useful if they have a commercial mortgage that covers their business premises. Any issues with repaying this mortgage could have a massive impact on their business’ ability to operate – if the property is repossessed.

There are a few additional requirements to consider when taking out a mortgage when your are self employed. Lenders will need additional information before approving the loan, including but not limited to:

  • How long you have been self employed for (more or less than 12 months)
  • If you are able to provide proof of income
  • How your income is received (salary, dividends etc)
  • Do you own multiple businesses?
  • Is the business profitable?

For more information on mortgages for those who are self employed click HERE.

Fixed rate mortgages with bad credit

There are many people in the UK, who through various circumstances have ended up with poor credit. This is a fairly common occurrence and something lenders will have seen many times. Bad credit can result from things such as:

When it comes to bad credit mortgages, there will be some lenders that will be better than others for approving loans. We have researched extensively to add these lenders to our approved panel. These lenders are:

  • Accord Mortgages
  • Aldermore
  • Bluestone
  • Kensington
  • Paragon
  • Precise
  • The Mortgage Lender

With a smaller amount of bad credit, it may still be possible to have access to deals through mainstream lenders as well. All of the above lenders will be able to offer fixed rate mortgages with reasonable interest rates.

We would always advise speaking to a mortgage specialist if concerned that your credit history may affect your mortgage application. A specialist such as us will be able to answer any questions you may have. We will be able to point you in the direction of the perfect lender suited to your financial situation.

For more information on mortgage deals with bad credit click HERE.

Best mortgage lenders for fixed rates

There are over 100 lenders currently operating within the UK. This means there is a huge variety of options for who to take out a mortgage with. All lenders will have varying rates and policies with accompanying pros and cons.

A fixed rate mortgage is something that is widely available and so lenders will often compete to offer the best rates to attract more potential borrowers.

This is excellent for anyone looking to take out a mortgage. This is because there will often be some lenders with much more preferable rates, offering the perfect mortgage to suit their needs and at a reasonable rate.

The key to securing the best possible lender for your mortgage is to compare the lenders currently offering deals, to determine which one seems the most appropriate choice.

If unsure where to begin with this comparison, it is a good idea to consult with a fixed rate mortgage specialist. Specialists will often be able to access preferential rates due to pre-existing relationships with lenders.

How does income work for fixed rate mortgages?

Income will work in much the same way for a fixed term mortgage as it will for a mortgage with another type of interest rate.

When applying for a mortgage, a lender will ask a series of questions related to your finances and credit history. This allows them to gather the relevant information they need to decide whether there is any risk involved in lending to you.

There are several basic questions they will ask related to your income including ones such as:

  • What is your monthly income vs your expenses (utility bills etc)?
  • What is your amount of annual income?
  • Are you currently in employment and have you been for 3 months or longer?
  • Are you self employed? Can you provide proof of income if so?
  • What is your current credit score and credit history?

These questions are standard practice and nothing to be concerned about. Generally speaking, no matter the answers there will usually be a lender that will be willing to offer a mortgage loan.

If one declines to offer a mortgage due to an issue with your income, speak to other providers. What may be a problem for one lender may not be with another. If struggling to find the right lender for your needs, speak to a mortgage specialist for further advice.

Buy to Let fixed rate mortgage

A fixed rate mortgage can be a favourable choice for those who are looking to loan for buy to let purposes, such as portfolio landlords and property investors.

With a buy to let mortgage, a mortgage loan will be taken out on the understanding that the funds will be used to purchase a property that is then let to a tenant. This mortgage type can offer many benefits to those wishing to invest their money in property.

Landlords and investors who have a large portfolio of properties to manage can greatly benefit from fixed rate mortgages. The amount paid per month on the interest element of their loan will not change for the duration of the fixed period.

This means there will never be a sudden unexpected increase in expense. An increase in interest rate would otherwise have to be adjusted to accordingly and quickly, in terms of higher rent payments charged to cover loss of profit.

For more information on buy to let mortgages click HERE.

Interest only fixed rate mortgage

The rate of interest charged on a mortgage is particularly relevant if that is the only element of the mortgage being repaid every month. This is the case with an interest only mortgage.

With an interest only mortgage, the borrower pays only the interest element of their loan back every month. The full amount of the capital borrowed is repaid at the end of the mortgage term.

As the interest is the entirety of the payment per month, it makes sense to consider that having this payment at a set rate can be beneficial. Interest only is a popular option for those who take out buy to let mortgages.

With one or more properties to manage, having a set rate of payment can allow for financial planning years in advance. For anyone managing a property business, this is a very good option for financial stability.

For more information on interest only mortgages click HERE.

Cheapest fixed rate mortgage

The way of accessing the cheapest possible rates for a fixed rate mortgage is through comparison. First of all though, it is a good idea to sit down and work how much you can afford to save in terms of a deposit and how much is affordable for monthly repayments.

This will allow for narrowing down options to lenders that are the most suitable for your needs. From there it is simple to check which of these lenders will offer the cheapest interest rate, whilst also still being the right choice across the board.

Compare fixed rate mortgages that are available across the market to determine which lenders are offering suitable terms at a price that suits your budget.

If unsure on where to begin with these comparisons, a mortgage specialist will be able to help.

A specialist will also often have access to more preferential rates than if you go directly to a lender. This will be due to specialists and brokers having pre-existing relationships and agreements with many lenders across the UK.

Mortgages specialists for fixed rates

There are specialist mortgage experts such as us, that are able to source the best possible fixed rate mortgage rates currently on the market. With a dedicated panel of over 50 lenders, we will always be able to source the perfect mortgage deal.

We are able to compare fixed rate mortgages and lenders to determine which is the most suitable for each individual borrower. This means anyone who accesses a mortgage through us will access the most appropriate deal for their needs and at the best rate available.

Speak to one of our specialists for more advice on securing a fixed rate mortgage.

*according to ukfinance.org.uk

Useful Resources

Gov.uk – Support for mortgage interest

Citizen’s Advice – Deciding if you should apply for SMI

Statista.com – Average mortgage interest rates in the UK from March 2000 to August 2022