Possibly the easiest type of mortgage to understand is the Fixed Rate Mortgage (please visit our partner for fixed rate loans). You know when you start exactly what interest rate you are going to be charged and hence exactly how much your monthly repayments will be and they won't change for the fixed rate period. That period can be anything from 6 months to 6 years, even longer in some cases. The reason these mortgages are attractive is that for some people an unexpected increase in their monthly repayments would just be unmanageable.

If interest rates fall those people on variable rate plans will reap the benefit but those on a higher fixed rate will lose out, but at least their repayments cannot go up whatever happens and that situation of security is the main selling point. Fixed rate offers are chainging all the time with new products coming on the market every week it seems. The mortgage companies are trying to offer the best fixed rates they can without taking too much of a risk should interest rates start to increase faster than expected. With fixed rate deals it's worth checking carefully what will happen once the fixed rate period is over. There could be an extended tie-inb period once the fixed rate ends, with penalty charges if you pay off the mortgage or remortgage before the tie-in is over. Also the variable rate you are going to revert to once the fixed rate ends needs to be competitive.

With some of the smaller, less well-known companies this may not be the case. It's also wise to verify any other clauses that may be attached to the offer - for example you may be restricted from making any lump-sum repayments until the tie-in period is over. Don't forget with fixed rate deals the mortgage company is taking a calculated gamble on future interest rates and if they are offering a great deal that could cost them early on then chances are the deal reverts to be more favourable to them later. See out table of fixed rate mortgage offers.

Some people are attracted to fixed rate deals if there has been talk by analysts that interest rates might increase in the short term, and in fact the people who pre-empted the recent increases in interest rates by securing a fixed rate deal six months ago, are probably saving a reasonable amount at the moment. However attractive fixed rates come and go, so you may need to act quickly if you find a deal that looks particularly good.