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A fixed rate mortgage product has an interest rate that stays the same for the entire period that it is fixed. At Molo we offer fixed rate mortgages from 15 to 40 years. This gives you absolute certainty about how much you will pay each month, as that amount also will not change. However, if interest rates drop, you will not benefit from the lower rates as your mortgage has been fixed already. But if interest rates rise, the increase will also not be passed onto you. Your payments will remain the same throughout the fixed period of your chosen mortgage product.

Getting a mortgage with a shorter fixed period – 2 years and 5 years – gives you the ability to review and change your mortgage after that timeframe. That means you will also have a shorter period of ‘protection’ against potential interest rate rises. If after your 2 year mortgage term ends the interest rates in the market are higher than what you had initially, your new mortgage may be more expensive than what you were paying before. You may also find yourself subject to added costs (for example, legal, valuation and product fees) if you choose to remortgage.

Fixed rate products with longer initial periods, between 10 years and 40 years, give you a longer period of protection against interest rate rises and a longer period of certainty about your mortgage payments. 

If you wish to get out of a fixed rate mortgage before the initial period ends, you may have to pay an early repayment charge, and that’s more likely to happen the longer the initial fixed period. (See our Tariff of Charges for details of how much those early repayment charges could be.)

No one can know for certain what might happen to interest rates over the next 10 or 40 years. So it’s important for you to know what type of benefit is more important when getting your mortgage, the certainty of fixing your mortgage payments at a set rate now and then not having to worry about it, or the flexibility of being able to change your mortgage product from time to time.

A fixed rate mortgage secures the interest rate for its entire term. With a long-term mortgage, your rate won’t change even if interest rates increase or decrease elsewhere. You can rest assured that your mortgage payments will never change.

Fixed-rate mortgages set the interest rate, meaning you pay the same amount each month for the fixed term. A variable rate follows the Bank of England base rate and changes in accordance. If the base rate goes up, the interest on your mortgage increases and your payments rise. But if it goes down, your payments decrease.