Mortgage sorter | How to find a good fixed rate

How to to find a good fixed rate

- Is it ever too late?

If experts say interest rates are likely to rise, it might seem like a no-brainer to opt for a mortgage that charges a fixed rate, as this will protect you from increases.

(For more on this, read Fixed-rate mortgages.)

The problem is that mortgage lenders are always at least one step ahead and will have already raised their fixed rates in anticipation.

Because of this, in times of interest rate uncertainty, discounted variable rates are often cheaper than fixes.

And, as lenders expect fixes to be in particular demand, you are also likely to find they come with higher arrangement fees than many comparable discounts.

Think before you fix

This is why you need to think carefully and do your sums before signing up for a fixed-rate deal.

If, say, the general consensus is that rates may rise another 0.25 or 0.5 percentage points before starting to fall in about nine months time, you might think it would be a good idea to choose a market-leading short fix a year perhaps and then remortgage to a cheaper deal.

But there are expenses involved in this. (See Costs of remortgaging.)

Anyway, a fix this short is likely to come with early redemption penalties that tie you into paying a far higher long-term standard variable rate for several years.

(To read more about this, go to How to avoid paying an early redemption penalty.)

So what about going, say, for a two-year fixed-rate deal which allows you to move on without penalty after this time?

Unfortunately, because lenders expect borrowers to want deals like this when rates are likely to rise, you may find they're not particularly cheap.

The alternative

If you can't find a fix you like, it might be worth considering a discount tracker deal.

To find out why, read When is a good time to choose a tracker?

To read more on this subject please see the list below or your mortgage guide or your home buying guide

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