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Fixed Rate Mortgage

The choice to go with a fixed rate mortgage means that your monthly repayments will stay the same regardless of the fluctuation that interest rates are prone to experiencing. The majority of people choose a fixed rate mortgage that has a running period of between one and five years, although longer and shorter deals are available.
Fixed rate mortgages are prevalent because they are useful for budgeting, as one of your largest monthly outgoings will not change for the period of the deal. They are also an advantage if interest rates look likely to rise in the coming months.

Difference to SVR

Although fixed rate mortgages are usually cheaper than the standard variable rate mortgages (SVR) at the time the borrowing occurs, there is a risk you may pay over the odds if interest rates fall. In the eventuality of this happening you will have to weigh up the cost of redemption penalties, which can be rather steep, to get yourself out of the deal early, against the benefits of taking out a new mortgage with a better rate.
Redemption penalties are generally noted to reduce with each year the loan lasts. Particularly low fixed rate mortgages may have redemption penalties that overhang, tying you into the lender's standard variable rate for a year or more after the loan period has passed.

If interest rates are expected to rise then fixed mortgage rates may be higher than standard variable mortgage rates. Be wary if rates are expected to fall, as you may be fixing at an unnecessarily high rate.

Things to consider

With both fixed and capped rate mortgages, some deals may depend upon the purchasing of insurance - building or contents cover, or both - from the lender.
A capped rate mortgage has a specified upper limit above which the rate is not allowed to go, but it will follow interest rates downwards. They are generally worth considering when interest rates are either rising rapidly, or when there is uncertainty over in which direction they are going.
The rates generally apply for periods of up to three years, sometimes longer. They are usually lower than the standard variable rate, but tend not to be as economical as some fixed and discounted rates.
Some capped rates come with the stipulation that - even if rates drop - your mortgage will not follow beyond a certain point. Deals that come with this sort of "collar" are less desirable, as you will not benefit from significant rate falls.
Redemption penalties usually apply for the period of the rate, and may apply for several years beyond then, when you have gone onto the standard variable rate.