A Fixed Rate Mortgage has a fixed interest rate for a fixed amount of time; usually up to five years. This means your mortgage payments will be exactly the same amount each month, until the deal expires.

Knowing precisely how much your monthly mortgage payments will be can be advantageous, particularly if you’re on a tight budget. This is because the rate of interest that you pay will remain the same for a set period of time, allowing you to plan your finances and protecting you against sharp rises in the interest rate.

However, if interest rates drop you may end up paying more than you would have done with a variable rate mortgage and at the end of the fixed-term, the interest rate will revert to the lender's standard variable rate, which is typically around 2% above the Bank of England’s base rate.

Exit penalties are also usually quite high with this type of mortgage and in the case of an extended tie in, the redemption penalty is payable even after the fixed rate period has ended.

If you would like more information about this or any other mortgage product offered by Cook Allen & Associates, please call 0845 257 9301, or complete our brief questionnaire and one of our qualified mortgage advisers will get in touch to discuss you mortgage requirements.