These are very popular with purchasers who wish to know exactly what their monthly repayments will be for a definite length of time.

This is good as it allows the borrowers to budget their costs.

It also provides peace of mind if the market is rising because they know that their payments are the same till the end of the fixed rate term, typically 2,3,4,5, or 10 years.

Obviously in a falling market the borrowers payment will be the same but if the rate were lower then they would still pay the higher fixed rate. It is a case of swings and roundabouts.

If the mortgage were redeemed during the fixed term then there would normally be a penalty of 6 months mortgage payments.

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