A simples guide

Short Term Fixed Rate Mortgages

Whether you’re buying your first home, moving house or simply remortgaging for a better deal, it can be hard to know where to start looking when it comes to getting a mortgage.


The good news is that you’re in the right place. We have a range of short term fixed rate mortgage deals for you to choose from, all helpfully sorted by product, rate or term, whichever suits you.


What is a short term fixed rate mortgage?

Let’s start with the basics. A mortgage comes with two components. The first is the amount of money you’ve borrowed to buy the property. This is called the capital. The second piece, is the money that the bank charges you for lending you the capital. This is known as the interest.

On a variable rate mortgage the interest rate charged on borrowing the capital can move in line with the base rate set by the Bank of England. So, if the Bank of England increased interest rates, your mortgage would probably go up too in line with the increase. However, when we talk about short term fixed rate mortgages, we are talking about the interest part being fixed for a period of time (from 1 to 10 years).


Should you get a short term fixed rate mortgage?

Well, all mortgage types come with pro’s and con’s. What is best for some people won’t be best for others. What we can say is this:

The good news:

  • The interest you pay will be fixed  for the term of your deal so:
    • It won’t go up if interest rates rise
    • You can budget with certainty for that period
  • The fixed rate interest on 2 year deals start from 1.2%, and 5 year deals from 1.99%.

The other news:

  • Fixed rate mortgages can have higher arrangement fees typically between £1,000 and £2,000.  The Annual Percentage Rate of Change (APRC) which you’ll see quoted takes into account these fees. That’s why you might see a deal with a lower quoted initial rate having a higher quoted APRC.
  • If you do find yourself with extra cash and want to repay early there are likely to be early repayment fees on a fixed rate mortgage. These will probably reduce over the period of the fixed term.
  • At the end of the period your mortgage will revert to the lenders ‘standard basic rate’. These can vary quite a bit so be careful to take this into account. You can of course arrange a new deal when your fixed rate deal comes to an end.
house keys

What is the shortest term I can fix for?

Most fixed rate deals are between 2 and 5 years.

There are a few one year deals on the market and also some which fix for a longer period, for example 10 years.

Property developers have a specialist commercial short term mortgage options available from commercial lenders.

What should I do next?

As we said at the outset, you’re in the right place to compare mortgage deals right now. We have a wide choice of fixed rate deals in addition to other mortgage types like trackers, discounts and of course variable rate options.

Comparing really couldn’t be easier so let us do the hard work for you and see how much you could save.

All mortgage rate details are based on information provided on comparethemarket.com data as at 18th April 2016.

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