Can You Fix An Interest-Only Mortgage?

With an interest-only mortgage your monthly payments are based on the interest on the amount you borrowed. You won’t pay back the loan until the end of your mortgage term.

Many property buyers want to know whether the interest rate can be fixed or whether it’s variable and subject to change. Many are put off by the idea of the payable interest fluctuating a lot, especially if the rates are not in your favour. This guide will answer all your queries on interest-only mortgages, including whether it’s possible to fix your monthly payments.

Interest-only mortgages have strict lending criteria, and are typically handed out to wealthy individuals or those with lots of equity. This means it’s not suitable for every homeowner.

The good news is that interest-only mortgages can be fixed. This will help you budget and save accordingly. It offers a good level of security as you’ll know exactly how much you need to pay each month.

The opposite of this is a tracker mortgage – which is also available as an interest-only product. The interest falls in line with the base rate set by the Bank of England. The rate is calculated externally from the lender. Your monthly repayments are not fixed, so could go up or down. Tracker mortgages can be cheaper if interest rates fall in your favour, but they could also be more expensive.

Can you switch from a tracker to a fixed-rate mortgage?

If you’re on a tracker rate mortgage and struggling with increasing interest payments, you may want to know whether you can change to a fixed-rate mortgage.

If you remortgage onto a fixed-rate mortgage, this will fix the interest rate for a set period of time. Remember first to check whether it’s possible to remortgage under the terms of your current contract, and whether there’s an exit fee.

Book a consultation

Speak to Agentis mortgage advisors today. We can explain how a fixed-rate mortgage works or help you remortgage if your current loan is no longer suiting your circumstances.

Contact us to arrange your free initial consultation.