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Five-year fixed rate mortgages offer a balance between two-year fixed rate mortgages, which might not offer enough security for some people, and 10-year fixed rate mortgages, which are costly and can lock you in for a long time.

What is a five-year fixed rate mortgage?

Most UK banks and building societies offer five-year fixed rate mortgages, which provide a fixed interest rate for five years. During this period your monthly repayments will not change, even if the Bank of England increases the base interest rate or your bank hikes its standard variable rate (SVR).

After five years, the mortgage will revert to your lender’s SVR, which will be quite a lot higher than your fixed rate. As of March 2018, five-year fixed rate mortgages are at around 2%; most SVRs are at around 4%. On a mortgage of £400,000 over 25 years, your monthly repayments would go from £1,700 to £2,100.

As with all fixed-rate mortgages, you will likely be charged a hefty fee if you overpay (to clear your debt more quickly) or repay your mortgage entirely (remortgaging or switching mortgages) before the end of the five-year promotional period. This fee varies between mortgages, but generally it’s around 3% to 5% – which will likely be thousands of pounds, unless you have a very small mortgage.

Can you get a five-year fixed rate mortgage?

There are no particular criteria for obtaining a five-year fixed rate mortgage. The best interest rates are reserved for those with a large deposit, though – and because you’re stuck with it for five years, it’s probably worth aiming for 30% deposit (70% LTV) or better.

Q. What is the longest fixed rate mortgage I can get?

The longest fixed-rate mortgage deal in the UK is 10 years. You will pay a pretty hefty premium for financial security, though: the interest rate is usually about 0.5% higher than the best five-year fixed rate deals. Over 10 years, that’s a lot of extra interest.

Q. Are fixed rate mortgages the best deals?

It all comes down to whether you need the financial security of a five-year fixed rate mortgage. Better interest rates are certainly available if you can live with a two-year fixed rate mortgage (lowest is 1.24%) or a tracker or discount rate mortgage.

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