Question about fixed rate

d1anac

Hi
I have question about fixed rate mortgages, okay supposing you have a fixed rate of 6% for five years which is say a £1000 a month.
My question is, say the interest rate is a 9% even though your paying a fixed rate of 6% will the extra 3% that you dont have to pay, sort of make the term longer, and supposing the rate is 2% and were paying 6% will the 4% extra were paying reduce the term?

Or does it make no difference at all

feisty1

mm!! do u think this question is clear! what interest rate would be 9% if the fixed was 6%!!!!!!!!!!!!!!

_Andy_

OP - could you rephrase the question as it makes no sense at the moment.

Thanks

Emmalou

I think I know what you mean d1anac.

If you are on a fixed of 6% and the BOE rate is below or above that, it will make no difference whatsoever to your mortgage term.
Either you are lucky and pay less (unlikely in the present climate!), or you are unlucky and pay more.

I unfortunately am one of the unlucky ones who is on a fixed mortgage rate of 5.39% when the BOE rate is much lower. However, my mortgage term stays the same (but I just pay more, damn!).

Robert_Sterling_3

As Emmalou says if you are on a fixed rate of 6% then that is what you pay. What the bank rate happens to be matters not.

d1anac

thanks emmalou, yep im on a fixed rate of 5.79% i was just wondering if the extra interest im paying was paying off my mortgage quicker.

d1anac

i thought that perhaps it was just the payments that are set on a fixed rate based on a set interest rate. but whatever the boe rate where you underpaid it would add term time to your mortgage or if overpaid it would decrease

d1anac

ps sorry everyone i'm just confusing everyone, i know what i mean, i just cant express it lol

catriona69

Perhaps you should have found out what 'fixed rate' meant before you signed up to your mortgage.

blueberrypie

d1anac wrote: »

thanks emmalou, yep im on a fixed rate of 5.79% i was just wondering if the extra interest im paying was paying off my mortgage quicker.

You are on a *fixed rate*. What that means is that you pay interest at *that* rate - it doesn't matter *what* is going on generally with interest rates overall - your mortgage is at *your* fixed rate.

Your fixed rate sets your *interest rate* - not just your payment.

catriona69

Btw, once your 5 years on your fixed rate you will go onto your lender's SVR (unless you remortgage) which will be a certain percent above the base rate. Only then will you have to take note of what the base rate is doing (well actually, if it suddenly started going up really high whilst you were on your fixed rate you ought to think about it and start saving for when your mortgage payments go up but what I'm saying is your payments wouldn't change until you came off your fixed deal).