A fixed rate means you know exactly how much you'll pay each month for however long your fixed period lasts. The most popular fixed rates last for between two and five years. However, ten and even the life of the mortgage are offered. When a mortgage borrower reaches the end of a fixed rate term, the interest rate on their mortgage reverts to the standard variable rate offered by the lender. This is generally considerably higher than the fixed rate deal offered. If you want to get out of your fixed rate deal early, you'll usually pay an early repayment penalty.
The main advantage of a fixed rate mortgage is that it provides peace of mind and financial stability. The terms mean you'll be protected against any increases in the base rate, and consequent adjustments to lender standard variable rate. This allows borrowers to budget for payments. Disadvantage of a fixed rate mortgage is large penalty fees for getting out early (before the term ends) or when the variable interest rate starts to fall, you'll be paying more than you need to. But remember that rates do go up as well as down, and the security offered by a fixed rate can be worth it, even if the rate you're paying isn't always the cheapest. Variable Variable rate mortgages are based on the standard variable rate offered by mortgage lenders. The level at which the standard variable rate is set varies between different lenders. Each lender publishes their own rates as per their schedule of tariffs. However, don't assume lenders automatically shift their mortgage rates in line with market competitiveness. Normally you can overpay on a variable rate deal - this is a good way to cut down the term and total interest on a loan. Compare different lenders rates and tariffs before making any decisions.