How to find our best five-year fixed rate mortgage deals

Arranging a mortgage can be daunting. For many it’s a minefield of confusing percentage rates, financial jargon and small print. We’ve put together a guide to help you get the best five-year fixed-rate mortgage for your circumstances.

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What is a five-year fixed-rate mortgage?

A five-year fixed-rate mortgage is a loan that gives you the same interest rate for five years, no matter what happens to Bank of England interest rates. Once those five years are up, your mortgage will usually transfer to the lender’s standard variable rate (SVR), unless you choose to switch your mortgage to a different deal or provider. The standard variable rate is typically higher than a fixed rate, although the gap has narrowed significantly recently. 

A fixed-rate mortgage can last for fewer than five years, or longer.

Your home may be repossessed if you don’t keep up with repayments on your mortgage.

Top tip

When comparing five-year mortgages, it’s important to consider the APRC figure, not just the initial fixed rate for the first five years. This gives you a better idea of the overall cost of the mortgage because it shows the total costs each year, including all fees and charges.

What are the advantages of a five-year fixed-rate mortgage?

For some, it’s worth fixing your interest rate because:

It gives you security
A fixed rate means that, even if interest rates rise, your mortgage payments won’t go up.
You’ll know what you’re paying each month
That makes it easier to budget. With no surprises, you’ll have more financial freedom to plan for the future.
You’ll reduce your admin
If you opt for a shorter fixed term, you’ll potentially have to remortgage more frequently.

What are the disadvantages of a five-year fixed mortgage?

Five-year fixed-rate mortgages do, of course, have their downsides. For example:

Your interest rate is fixed
If interest rates fall, you could be stuck paying a higher rate for five years. That may mean you end up paying more overall than you would have with a discounted or tracker mortgage, where repayments rise and fall in line with the Bank of England base rate.
You’ll need to pay a fee
When arranging a five-year fixed-rate mortgage (as with other mortgages), you’ll usually have to pay a product fee, also known as an arrangement fee. This is the cost for setting up the mortgage. If you can’t afford the fee upfront, you can often have the amount added to your mortgage – but you’ll also have to pay interest on it, which can add up over time.
Changing your mortgage during your fixed term is pricey
If, for whatever reason, you decide you want out of your fixed-term rate before the five years are up, most mortgage lenders will charge a penalty. Early repayment charges (ERCs) can cost thousands, so only take a fixed-term interest rate if you’re sure you’re going to stick with the mortgage for the duration. It’s worth checking whether your mortgage is ‘portable’ – in other words, can you take it with you if you move home during the fixed-rate period?

What is the average five-year fixed rate mortgage today?

At the time of writing, five-year fixed rate mortgage interest rates were around 5.1% but what you’ll pay depends on several factors, including how much deposit you’re putting down and whether you’re remortgaging or a first-time buyer. While fixed-rate mortgages aren’t directly affected by the Bank of England base rate, the overall economic climate and the change in the base rate can affect the cost of mortgages for lenders, which are typically passed on to borrowers.

Although mortgages are regulated by the Financial Conduct Authority (FCA) to make provision of financial products fairer, lenders still base their pricing on risk.

Compare mortgages with us to see what five-year fixed rates are currently on offer. You’ll just need to tell us the property value, the deposit amount and how long you want the mortgage to last.

How do I choose the best five-year fixed-rate mortgage for me?

When choosing the best five-year fixed-rate mortgage for you, consider:

The mortgage rate
The first thing to do is check five-year fixed mortgage rates. Mortgage rates are determined by several factors: your credit history, where you live and the size of your deposit. The higher your deposit, the lower your interest rate is likely to be.

Obviously, you’ll want to find the lowest rate available to you, as a higher interest rate will increase your monthly payments. You can see the impact different rates of interest would have on your monthly payments by using our mortgage calculator. But be aware that some of the lowest fixed-rate mortgages have high arrangement fees. Always check the APRC to help you work out the overall cost of your mortgage.
Fees and charges
Read the small print. Make sure you know exactly what you’ll be charged upfront and what you’ll pay if you want to leave your mortgage early – for example, if you want to remortgage or even pay off the mortgage altogether. Even if the second scenario sounds unlikely, it’s good to consider just in case.

When choosing a mortgage, it’s important to work out the total cost – rate plus fees – to ensure you’re comparing like for like. This is shown as ‘Initial term cost’ in our comparison. It’s the total cost to you within your five-year fixed term, including monthly repayments, the product fee and other associated charges. Ideally, you’ll be looking for the best fixed-rate mortgage with no fees, which although uncommon, can be found.

How much deposit do I need for a five-year fixed-rate mortgage?

In the current market, most lenders are insisting on a minimum deposit of 10% to 15%.

According to HM Land Registry figures, the average UK house price in August 2022 was £295,903, so for that you’d need a 10% deposit of roughly £29,500. If you want access to the cheapest deals, you might need a deposit of even more than this.

If you don’t have a large deposit, don’t despair. You might be eligible for one of the Government’s Affordable Home Ownership schemes which typically require a much smaller deposit.

Find out more about saving for a mortgage deposit.

How your loan-to-value ratio will impact your fixed-rate mortgage

Typically, the higher your loan-to-value (LTV), the higher your interest rate and monthly repayments will be. LTV is the percentage your mortgage lender is willing to lend in relation to the value of your property. So, if you have a 20% deposit, the LTV will be 80%. The more deposit you have, the lower the LTV will be. Increasing your deposit and lowering the LTV could mean a better interest rate and lower monthly repayments for the first five years.

Let’s take a very basic example (not including initial product fees):

You buy a house for £300,000 with a 10% deposit of £30,000. You’ll need to borrow £270,000 so your LTV will be 90%. If the initial interest rate is 5.49%, your monthly repayments will be around £1,532 for the first five years.

Lenders tend to offer interest rates in bands based on an LTV of 95%, 90%, 85% and 80%, down to 60% typically. If you can raise a larger deposit, you could move into a lower band, which may mean you’re offered a lower interest rate. In this example, if you increase your deposit to £45,500, your LTV will drop to 85%. The interest rate for the lower LTV drops to 5.31%, so your monthly repayments will be around £1,418 – saving you £114 a month.

Did you know?

It’s still technically possible to get a 95% LTV mortgage, but in the current economic climate the chances of finding one are very slim. The Government-backed Mortgage Guarantee Scheme, which helped increase the supply of 95% mortgages, is due to end on 31 December 2023, and it’s uncertain whether lenders will continue to offer these products once the scheme has ended.

What other mortgage options do I have?

Here’s a look at some other mortgage options and how they compare to five-year fixed-rate products:

Two-year fixed-rate
Two-year fixed-rate mortgages tend to have lower interest rates and smaller monthly payments than five-year fixed-rate mortgages. A two-year fixed deal also means you’re not tied in for as long and won’t have to wait for five years before you can switch deals.

A two-year fixed mortgage offers greater short-term flexibility, but you’ll have to pay a product fee every time it comes to remortgaging. Product fees tend to be higher for shorter-term fixed-rate mortgages, so it could outweigh the benefit of a lower interest rate. You’ll also have the admin of sorting out remortgaging in around 20 months’ time, so your new deal will be ready to go as soon as your current deal ends. But, of course, it could be worth it for what you would save.

10-year fixed-rate
While a 10-year fixed-rate mortgage gives you more security over a longer period of time, it also means you’re locked into the same mortgage deal for a whole decade. Interest rates also tend to be higher than five-year mortgages as you have more security for longer. And bear in mind that it’s very difficult to predict what will happen to the economy over the next 10 years. If interest rates fall, you may end up paying a high price for longer security.

Tracker mortgage
A tracker mortgage is a variable mortgage that follows the Bank of England base rate. This means that your interest rate and monthly payments could go up and down. When the base rate is low and stable, a tracker mortgage could offer pretty good value. But when base rates are rising your interest rate will rise too, unlike with a fixed-rate mortgage.

A tracker mortgage can typically last between one to five years, although lifetime trackers can last as long as your mortgage. If you’re looking for a bit more certainty in uncertain times, then a five-year fixed mortgage might be a better answer.

Discount mortgage
This is another type of variable mortgage, offered at a discounted rate to the lender’s standard variable rate (SVR). For example, if the lender’s SVR is 6% and the discount they’re offering is 2%, the interest rate you’ll pay is 4%. The discount is usually for a short period, often around two years.

Be aware that SVRs differ between lenders, so a bigger discount from one doesn’t necessarily mean a lower interest rate and a better deal. Check the lender’s SVR as well as the advertised APRC for an overall cost comparison. If the lender’s SVR increases, your rate will also rise. So if the lender in the example raised their rates to 7%, the discount would remain at 2% and you’d be paying 5% interest rather than 3%.

Remember that for all types of mortgages, the actual interest rate you’re offered will depend on your loan amount, loan-to-value ratio and credit score.

What information do you need to find the best five-year fixed-rate mortgage deals?

Once you start looking for the best five-year fixed-rate mortgage deals, it’s a good idea to pull together the paperwork you’ll need for your application. This is likely to include:

Proof of name and address – typically, a full UK driving licence or passport, as well as utility bills
Bank statements for the past three to six months (up to three years of accounts if you’re self-employed)
Payslips for the past three months
P60 form from your employer
Tax form SA302 if you’re self-employed
Proof of deposit you’re putting towards the mortgage
Proof of any benefits you receive.

Lenders need to know that the mortgage repayments are affordable and will want proof that you can keep up with repayments, so gather as much information as you can to help support your application.

It’s also worth checking your credit file a few months before applying for a mortgage to see if you can improve it, if needed. The higher your credit rating, the more likely your chance of finding the best five-year fixed-rate mortgage deals.

Looking to compare fixed-rate mortgage deals? Let us do the hard work. All we need is a few details about you and your property, and we’ll give you a list of appropriate deals to choose from.

Frequently asked questions

Can I pay off a fixed-rate mortgage before it ends?

Yes, it should be possible to leave your mortgage early, but the bad news is you’ll probably have to pay an Early Repayment Charge (ERC). This could be between 1% to 5%, depending on the amount of time left on your fixed rate period. Your lender can tell you more. When you sign up to a mortgage, it’s a good idea to understand what, if any, early repayment charges could apply so you can make an informed decision.

Can I overpay a fixed-rate mortgage?

Many mortgage lenders will let you overpay your mortgage by a certain amount without penalties. Overpaying can reduce the time it takes you to pay off your mortgage and the overall cost, so it can be worth doing if you can afford it. In most cases, you can overpay up to 10% of your mortgage balance per year during the initial fixed-rate period. If you move onto your lender’s SVR, you can typically overpay as much as you want.

What should I do if my five year fixed rate mortgage is coming to an end?

If your five-year fixed-rate mortgage is nearly up, it’s worth shopping around to see if you can find a better deal. We can help you compare mortgages quickly and easily.

Make sure your credit rating is in the best possible shape as the end of your current deal approaches. Avoid making late payments on credit cards and loans, and check your credit record to make sure there are no mistakes. Remember, it can take six months for your credit score to improve, so think ahead when your deal is coming to an end.

What happens when my fixed-rate mortgage ends?

Your current provider should contact you, reminding you that your deal is coming to an end. You can consider remortgaging with them or look for a new provider.

If you do nothing, you’ll be switched to your lender’s standard variable rate when your fixed-rate mortgage ends. This is likely to be higher than what you’re paying.

If you remortgage, you might find that you’ve moved into a different loan-to-value (LTV) band and are potentially eligible for a better interest rate, especially if your home has gone up in value.

Do I need a good credit score for a fixed-rate mortgage?

You’ll typically need to have a higher credit score to access the best five-year fixed-rate mortgage deals.

But your credit score isn’t the only thing lenders look at. They’ll also consider how much you earn, your financial commitments, how affordable the repayments will be and the loan-to-value ratio.

If you have a poor credit score, it’s worth talking to a mortgage broker who might be able to find a specialist lender to help you. You’re likely to pay a much higher rate of interest, though, as you’ll be seen as a higher risk. Making your mortgage repayments in full and on time will help improve your credit score.

Can I get a fixed-rate mortgage with an offset account?

Yes, there are mortgage providers that offer fixed-rate offset mortgages, but you’re likely to have fewer options to choose from. You may also need to have a low LTV – for example, 75% or 80%.

When is a good time to opt for a five-year fixed rate mortgage?

A good time to agree a five-year deal is when you have no plans to move during that time and interest rates are low and steady, or starting to rise, so you lock in the low rate. Make sure you understand any early repayment charges if you need to end your deal early.

If interest rates are falling, it can be a good time to opt for a shorter fixed deal, or even a different type of mortgage like a tracker mortgage.

If you’re not sure which type of mortgage is right for you, then it’s a good idea to discuss your options with a mortgage broker.

Does getting a fixed rate mortgage mean I can afford to borrow more?

No. Lenders look at affordability overall to make sure you can make your repayments. It’s much better to be realistic about what you can afford rather than pushing yourself to the limit. To get a rough idea of what you could afford to borrow based on your income, try our mortgage calculator.

Will a fixed-rate mortgage go up if Bank of England rates change?

No. The whole point of a fixed-rate mortgage is that the rate is guaranteed to stay the same throughout the fixed period. If your rate is fixed for five years, it will stay the same for five years and your mortgage payments shouldn’t change during that time.