Guaranteeing your monthly repayments

With a fixed-rate mortgage, you have the guarantee that your monthly repayments will not change for a set period of time, most commonly 1, 2 or 5 years although other fixed terms are available. However, if you choose a variable rate mortgage your repayments could change. There are two types: tracker mortgages are linked to the Bank of England base rate. Discounted mortgages are linked to the lender’s standard variable rate (SVR). Changes to the SVR are at the lender’s discretion.


In these uncertain economic times a fixed rate mortgage provides the security of knowing that that your mortgage costs will not change, which makes them very attractive if you need to budget carefully or don’t want to run the risk of higher monthly payments. However, the trade-off is the fact that you won’t benefit if interest rates fall.

Rising inflation could mean we see rates start to rise sooner rather than later, and no one knows when the base rate will start to increase or how far it will go up by. This is the eternal dilemma, since no one can ever be sure what is going to happen to interest rates. Whilst you may get some pleasure out of following the economy and predicting future peaks and troughs, you don’t have to do this in order to work out whether you want to go for a fixed rate or not.