Jargon Buster - Definition of Fixed Rate Mortgage

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Fixed Rate Mortgage

is a type of mortgage whereby the interest rate remains constant and does not change, it is not affected by changes to the Bank of England base rate. Many lenders will only offer a fixed rate mortgages for a set number of years rather than for the full term of the mortgage.

Fixed rates mortgages provide peace of mind so that you know exactly how much your mortgage payments will be for the term of the fixed contract. One of the disadvantages of fixed rate mortgages is that there are often charges for making over payments, i.e. if you wanted to pay off part of the mortgage early.

Once the agreed number of years for a fixed rate mortgage has passed, the mortgage will usually revert back to the lenders variable rate.

Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

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