Fixed-period mortgages
How a fixed-selection loan works, what happens at reset, and the large-reset risk.
A fixed-period mortgage fixes the rate for an initial 2–20 years, then reprices at the then-current rate and contractual discount — offering temporary certainty but a potentially large reset afterward.
Key points
- The rate is fixed for an initial window (e.g. 2, 3, 5, 10, or 20 years), then reprices.
- A 10-year fixed-selection loan is not a 35-year fully fixed loan.
- At reset, the then-current rate and any contractual discount apply — potentially much higher.
- It suits borrowers wanting certainty for a defined period, not the whole term.
How a fixed-period loan works
A fixed-period or fixed-selection mortgage fixes the rate for an initial window — commonly 2, 3, 5, 10, or 20 years — and then reprices. It gives temporary certainty at a rate usually between a pure variable and a full-term fixed loan. The crucial point is that a 10-year fixed-selection loan is not a 35-year fully fixed Flat 35 loan: after the fixed period ends, the rate resets to the then-current rate minus whatever discount your contract still provides, which can be much higher than your initial rate.
The reset risk
The danger is a large reset. Borrowers sometimes treat the low initial fixed rate as the loan’s permanent character and are surprised when the reset arrives — especially if rates have risen in the meantime, as they did in Japan in 2026. Before choosing this structure, model the payment at plausible reset rates, confirm the discount margin that will apply after the fixed period, and make sure the household could absorb the reset. It suits a borrower with a defined certainty horizon (for example, planning to sell or refinance within the fixed window) more than a long-term hold.
Key points to carry away: The rate is fixed for an initial window (e.g. 2, 3, 5, 10, or 20 years), then reprices; A 10-year fixed-selection loan is not a 35-year fully fixed loan; At reset, the then-current rate and any contractual discount apply — potentially much higher; It suits borrowers wanting certainty for a defined period, not the whole term. Use the linked guides and calculators for the full decision, and confirm anything material with the lender, a licensed broker, a judicial scrivener, or a tax accountant before you act.
Who this is for
- Borrowers wanting certainty for a defined period
- Those planning to sell or refinance within the window
What this is not
- Long-term holders who cannot absorb a reset
- The initial fixed rate is temporary; model the reset before assuming the low rate lasts.
Frequently asked questions
What is a fixed-period mortgage?
A loan fixed for an initial period (e.g. 10 years) and repriced afterward at the then-current rate.
What happens after the fixed period?
The then-current rate and contractual discount apply, which can be much higher than the initial rate.