My partner has a new job and we need to move house to be near his work. We don’t currently have a mortgage as we’re renting now but we’re not first-time buyers. With the way that interest rates are at the moment, would we be better with a fixed rate or variable rate mortgage?

North Norfolk News: Diane Fish, independent financial adviser with Smith & PinchingDiane Fish, independent financial adviser with Smith & Pinching (Image: Smith & Pinching)

Diane Fish of Smith & Pinching responds:

I can’t give you a straightforward answer to this question as there are so many different factors that you will need to take into account before deciding, such as how big a deposit you can provide, what your earnings are, your normal expenditure, how much you want to spend on the house, how soon you are likely to want to move again, your ages and so on.

The combination of all those factors will help to establish which is the better type of rate for you. For example, if you have a need to be absolutely sure about how you will be spending on your mortgage over the next few years, it is likely that a fixed rate may be better for you. However, if you are likely to want to move again within say two years, being on a fixed rate could present other issues to consider.

Rises in the Bank of England base rate as seen recently are aimed to tackle rising inflation. However, this directly affects variable and tracker mortgages; people on these types of mortgage will have already seen their monthly payments increase. Interest rates for new fixed rate borrowing are also higher and we are seeing, for example, 6pc interest for a fixed term of five years. Whilst no-one has a crystal ball, we do believe that the UK inflation rate could remain elevated for the foreseeable future, certainly above the Bank of England's 2pc target, therefore it is likely that interest rates could remain elevated and possibly rise further.

On balance, a fixed rate mortgage is more likely to be your safest option in the short term, but this does vary in different cases, so please get advice before you commit to a mortgage deal. I think it would be really helpful for you to sit down with an independent mortgage broker and crunch the numbers so that you can understand the implications of the different types of rate, different borrowing levels and different lengths of mortgage.

Your home may be repossessed if you do not keep up payments on your mortgage. We do not offer deals that you can only obtain by going direct to a lender. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £950. Any opinions expressed in this article do not constitute advice.

For more information, please visit www.smith-pinching.co.uk