Fixed rate mortgages: to fix or not to fix?

This is the eternal dilemma of the modern mortgage shopper, 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.  The bottom line is whether or not you are willing or indeed able to take a risk.

Here’s how it works:

Say you currently have a tracker mortgage linked to the Bank of England base rate.  If the base rate falls, then your monthly mortgage payments fall.  However, if the base rate rises, then so do your mortgage payments.   It is this desire to have the cheapest possible mortgage deal, alongside the ability to afford an increase in payments which drives the basic decision to opt for a variable rate. 

If you believe that the base rate is going to remain stable or fall, then it may be wise to stay put on your tracker.  There will also be the matter of whether you have an early repayment charge attached to your mortgage, which could make a difference to your decision.  The chances are that you may be paying a slightly lower rate than the best fixed rate mortgages currently on the market.  However, if you are anxious about affording future payments – maybe you are anticipating a change in personal circumstances – then it might be wise to move onto a fixed rate mortgage.

Although you often pay slightly more for a fixed rate mortgage, for many people the added security is worth paying for.  They find that a fixed rate enables them to budget more easily and to rest assured that their payments will remain the same no matter what happens to the base rate.

It is for this reason that fixed rate mortgages are often the choice of first time buyers who are on a limited budget and young families who have to carefully monitor their finances.

Whilst a broker cannot predict the future, they can give informed, expert opinion on the current market and help you make a decision looking at the whole picture.

See also:
Free mortgage advice: our no broker fee policy
Best buy mortgages
Mortgage calculators online
Understanding mortgages
Tracker mortgages
100% mortgages
Flexible mortgages