Fixed Rate Mortgage
As you would expect, the mortgage rate is fixed for a set period of time, so no matter what movements occur in the lender's standard variable mortgage rate, the borrower's arrangement is fixed and, therefore, so are the monthly mortgage payments. This kind of arrangement would suit someone who likes to know where they stand.
If the standard variable mortgage rate falls below the fixed rate, hard luck. If it rises above, lucky you.
Although a fixed rate mortgage gives comfort during its term, the borrower has to be aware that when it ends, like all other schemes, the borrower reverts to the standard variable mortgage rate. Although an advantage, if the mortgage rates have dropped in the meantime, it can be a shock if the standard variable mortgage rate has shot upwards during this time. If the deal came with no "extended tie-ins" (which binds the borrower to stay on the variable mortgage rate for a period of time after the fixed rate ends), then a remortgage can always be arranged and another deal taken, say a discount this time, to lessen the payments.
