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UK Mortgage Types

Fixed rate mortgages — more information

There are basically two kinds of underling mortgage arrangement to any contract:

1. Interest only
2. Principal and interest

Compare UK fixed rate mortgage interest rates online

This page is designed to give the "pros and cons" of the fixed rate mortgages . If you want to compare your mortgage, or look at the possibilities for a new mortgage on fixed interest, click here:

Mortgage Calculator

Fixed interest arrangements are an interest repayment variation on a basic "principal and interest" approach.

The lender agrees to fix the interest rate for a set period of time - usually between 1 and 5 years.

After the agreed period, the interest rate owed usually reverts to a Variable Rate.

Pros: You can plan to a known budgetary situation, over time. No changes.

Cons. In times of low interest rates payments may be higher than on a variable rate mortgage. If interest rates might rise? With a fixed interest mortgage you're not gambling with your home.

If you want to leave before the agreed term there is usually a serious early redemption penalty. For example you may be charged six months gross interest if you leave a five-year fixed rate agreement.

Some penalties could even go beyond the fixed-rate period. This would be an "overhanging redemption penalty". Always read the small print and ask as many "stupid questions" as you feel like. You must be clear on what everything means.

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