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Fixed RateA fixed-rate mortgage ensures

• interest rate stability over a predetermined duration, safeguarding your monthly repayments from fluctuations—even if broader market interest rates increase.
• These arrangements are typically available in two-, three-, five-, or ten-year terms, offering predictable financial planning and peace of mind throughout the fixed period.
• As the fixed term nears its conclusion, it is advisable to proactively secure a subsequent mortgage agreement, since the loan will automatically transition to the lender’s Standard Variable Rate (SVR)—which is often associated with higher interest charges.

If you choose a fixed-rate mortgage, you will need to think about arranging your next mortgage deal a few months before the current one ends, as when it does, you’ll be moved onto your lender’s Standard Variable Rate (SVR), which generally means you’ll be charged a higher rate.

Interest-Only

With an interest-only mortgage, each month you only pay the interest outstanding on the mortgage, meaning that the capital sum remains the same throughout the period of the mortgage. You don’t pay off any of the capital until the end of the mortgage term.

This means that you will need to make other arrangements for paying back the capital sum. These mortgages are not as widely available as they once were. Lenders will now only lend money in this way if the borrower can clearly demonstrate how they propose to repay the capital sum at the end of the mortgage term.

Offset Mortgages

An offset mortgage allows you to use your savings to reduce the amount of interest you pay on your outstanding mortgage balance. It links your savings, and in some cases your current account, to your mortgage.

This means that instead of earning interest on your savings, you pay less interest on your mortgage. So, for example, if you have a mortgage of £125,000 and you have £25,000 in your linked accounts, then your monthly mortgage interest would be calculated on £100,000 instead of the balance of £125,000.

Whilst an offset mortgage can save you money and shorten your mortgage term, they can be more expensive than comparable deals, and there may be less choice available.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.