The interest rate on a fixed rate loan does not change during the fixed rate period which also means your minimum payment does not change either.

The ‘fixed rate period’ can vary, but you can usually “lock in” your repayments for between 1-5 years, with some lenders having 7, 10 and 15 year terms.

At the end of the ‘fixed rate’ period’, you can decide whether to re-fix you rate or allow it to roll over to a variable rate. Although the fixed rate period may only be a few years, the full loan term is longer and often set at 25 or 30 years.


  • You can be confident of repayment commitments during the fixed rate period.
  • Provides peace of mind if you are concerned about rate rises
  • Allows more precise budgeting
  • Interest rates are usually higher than a Standard or Basic variable loan
  • Redraw is rarely available
  • Some lenders change to Basic Variable rate at the end of the fixed rate period, whilst others reverts Standard Variable.
  • Often carries an unknown penalty for early payout of the loan
  • Most lenders only allow only limited additional payments


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