Fixed Rates VS Variable Rates

What is the difference between fixed and variable rate mortgages?

‍

Fixed Rates:

- A stable monthly payment for the fixed rate period of your mortgage meaning your payment will not change unless you miss a payment or make changes to your mortgage.

- You are protected against potential interest rate rises as your rate will stay the same

-Fixed rates allow you to budget for a set period of time

-If the bank of england base rates decreases and you're still in your fixed rate period, your monthly payment will not decrease. If you then want to change your mortgage to a better product during the fixed rate period you will likely pay a fee to do this, which is called an Early Repayment Charge.

‍

Variable Rates:

-If rates decrease your payment will decrease however if rates increase your payment will increase too.

-Interest rates can change at any time causing your payment to keep changing

-There is usually no limit on how much you can overpay

-You can leave at any time or fixed your deal in with what the lender is offering you