When obtaining a mortgage, one of the things home movers need to decide is what type of arrangement they want to apply for.
There are two main types of mortgage: fixed rate and variable rate.
As you may have guessed, a fixed rate mortgage means the interest rate on your repayments will stay the same throughout the duration of your agreement.
This type of mortgage is extremely beneficial for borrowers who want to budget and are keen to map out a steady and consistent repayment plan.
The downside is that signing up to this type of mortgage means you won't benefit from a lowering of interest rates.
Borrowers who opt for a variable rate mortgage will benefit from any fall in interest rates, but at the same time this also means if interest rates go up, so do mortgage repayments.
Variable rate agreements come in several different forms; Standard Variable Rate, capped rate, offset, tracker and discount being some of the best known.
According to a study of 1,500 Brits, borrowers are becoming increasingly likely to consider a fixed rate mortgage.
The research, carried out by HSBC, found that 72% of borrowers surveyed would consider fixing their mortgage for ten years as a way of providing certainty on financial outgoings.
'Millennials' - those who reached adulthood around the year 2000 – are the most likely to seek a fixed rate mortgage. When it comes to regions, more Londoners would consider fixing for ten years, followed by those in the North East and Yorkshire and Humberside.
The most common reason cited for considering fixing for ten years was knowing exactly how much needs to be paid each month, this was followed by making budgeting easier and offering financial peace of mind.
Other reasons for borrowers looking to fixed mortgages included reduced stress, uncertainty over how mortgage rates could fluctuate in the future and that it would allow them to focus on 'more important things'.
Although this study shows that more borrowers are looking towards fixed rate options, this doesn't mean it is necessarily the right option for you.
When preparing to apply for a mortgage you need to do your research and speak to mortgage brokers and financial advisers who will be able to provide you with the advice you'll need to make the right decision.