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Since these mortgages are based only on interest, you only have to pay the monthly interest rather than repayments on the capital This results in lower monthly payments and the repayment of the loan capital at the end of the term.
The interest rate of this type of mortgage 'tracks' the Bank Of England base rate and so you pay interest slightly higher than the Bank Of England sets out. If the interest rates at the Bank of England increase, you have to pay more as monthly payments on your mortgage. You can take advantage of this mortgage if and when there is a fall in the interest rate of the Bank of England as the monthly bills will be lower.
A fixed-rate mortgage refers to those loans which have a fixed interest rate for a fixed amount of time. This means that the mortgage interest rate will never change while in the agreed-upon fixed term. The fixed-term is an introductory offer and will normally vary from 2-5 years.