Interest Only Fixed Rate Mortgage
An interest only fixed rate mortgage would typically work in the following way:
- Each month you make payments to cover the interest of your mortgage loan
- The level of interest you would pay each month is set at a fixed rate for a certain amount of time (the fixed rate offer period)
- At the same time as making monthly interest only payments, you would be expected to be paying money into a long term savings plan on a regular basis
- At the end of your mortgage’s term, you would be expected to pay off the entire mortgage loan with the money from your savings plan.
There are several different banks and building societies that may be able to offer you an interest only fixed rate mortgage deal. To find the most competitive mortgage deal available to you, take the time to compare a number of different interest only fixed rate mortgage deals. You might like to refer to our mortgage comparison tables, which contain details of a number of different mortgage deals - if you can't see what you're looking for, call a lender direct to see if they can offer a mortgage that suits your requirements. An interest only fixed rate mortgage could carry the following benefits:
- As you are only required to pay interest payments, an interest only fixed rate mortgage could be initially cheaper
- The fixed interest rate could provide you with a sense of security, as it is not subject to change with the Bank of England base interest rate; this could also make it easier for you to set budgets
However, you may wish to consider the potential drawbacks:
- If the base interest rate dropped, your rate would still be fixed at the same amount
- There is a risk that your savings may not be able to cover your mortgage loan at the end of the term
There are some competitive mortgage deals available in our easy to use comparison tables.
Require mortgage advice? You can call our mortgage team on: 0117 332 6063
Monday to Friday 8.30am to 7pm