Where can I find the best 5-year fixed rate mortgage (UK)?

Is a 5-year fixed mortgage the best deal for you?

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Is a 5-year fixed mortgage a good idea?

Picking out a fixed-term mortgage has a range of pros and cons, so to figure out if a 5-year fixed-rate mortgage (UK) is the best deal for you, let’s consider the affecting factors.

First, let’s have a quick recap on fixed-rate mortgages

When you apply for a mortgage, your providers have various offers and options. For example, they offer varying interest rates depending on how big a risk they consider you, how much deposit you put down, and how long you sign up to stay with them.

Without engaging in any such offer, you’d sign up for a lender's standard variable rate (also known as tracker mortgages), which is calculated in line with the Bank of England base rate. As you'd correctly assume from a 'variable rate mortgage', your monthly repayments will fluctuate with any change in in the base rate—good or bad. Borrowers must be prepared for this, as interest rates fall and rise depending on the Bank of England.

A fixed-rate mortgage deal, however, ensures your payments remain the same throughout the term of the offer.

To decide if a short or long-term fixed-rate mortgage is a good idea for you, let’s examine the pros and cons.

The advantages of 5-year fixed mortgage rates (UK)

Long-term stability – the security of knowing exactly what you’ll pay each month

For anyone living at the edge of their budget, or those who feel safer not taking the risk of following the ups and downs of inflation and their interest rate, a longer-term fixed rate is a great option.

If you’re not planning any significant changes soon, like moving house, renovating, or funding a costly situation, five years of knowing where you stand financially helps you stay on budget and bump up your savings.

Lower interest rates convert to cheaper repayments

The idea of taking out a fixed-term deal is that you’ll get a preferable, predictable option, and a 5-year fixed rate should be considerably lower than the current standard rate. However, the gamble is that the base rate can drop as well as rise.

Right now, after the financial turmoil the Covid pandemic brought, the war in Ukraine, and the cost of living crisis, interest rates are heading back up after taking a significant dip after the lockdowns of 2020.

Avoid the fuss of remortgaging

When your fixed-rate deal ends, you’ll drop back onto the standard variable rate unless you go through the process again to find a new deal.

If you’re happy with your current option, why go to the trouble of tracking down another every two or three years? Sign up for five, and enjoy a much short things-to-do list! With five year fixed mortgage deals, you only need remortgage 5 times during a standard 25-year mortgage. You'd have to track down a new deal 8 or 9 times opting for 3-year fixed term options.

The disadvantages of 5-year fixed mortgage rates (UK)

You’ll pay higher interest rates than shorter-term options

Opting for a 2-year fixed rate deal will come with a lower interest rate, although, looking at UK mortgage rates, 5-year fixed deals aren’t vastly lower. However, interest rates fluctuate, so you never know what could happen to the market at any given moment.

You’ll pay early exit fees if you have to leave unexpectedly

Life has a habit of throwing curveballs when you least expect them. For example, if you need to free up extra cash by releasing the equity in your home, those early exit fees could take a big chunk out of the money you’d need to cover emergency payments.

That said, if your emergency is moving house (for a better job, schools, change in circumstances, etc.), then it makes sense to find a transferable mortgage while tracking down your deal in the first place. Plenty of lenders will let you take your mortgage with you when you move house, dodging those early repayment charges that could cripple an already tight budget.

You’ll miss out on any falling interest rate as well as dodging them when they rise

Signing into a fixed rate is a tale of two halves. Yes, it protects you from the rising rates of a tracker mortgage during your fixed-rate period (in the current climate, for example) and keeping your monthly payments in line with your budget, but you also don’t reap the rewards of falling interest rates, like during the lockdown periods.

They come with higher product or arrangement fees

Each lender needs to make its share of profit from every mortgage and mortgage deal they deliver. So, for extended fixed-rate options where the buyer stands to save money on their monthly repayments, they’ll bump up the arrangement fee to claim a little of their loss back.

The buyer will still stand to save over the term, but perhaps not as much as they’d hoped with a lower product cost. Working out the overall cost for comparison, and not just plumping for the lender offering the best interest rate, is essential.

5-year fixed rate mortgage UK FAQs

Can you get a 5-year fixed rate mortgage with bad credit?

Yes. There are lenders available who will work with every type of borrower. So whether you’re on a low income, a single parent, a freelancer, or have struggled with credit in the past, we can match you with the ideal lender for your circumstances. We'll compare mortgages from our wide range of specialist lenders as most high-street lenders won't entertain bad credit applications.

Can I get a five-year mortgage deal that isn’t based on a fixed rate?

Discounted standard variable rate mortgages are still linked to the BoE base rate but at a slightly lower interest rate for this type of tracker mortgage. Again, you’ll pay a set-up fee to earn the discount, but you’ll take advantage of any sudden drops the Bank of England makes to the rate.

Can you get a 5-year fixed mortgage on a buy-to-let property?

Absolutely. Fixed-rate options aren’t solely for homeowner mortgages; you can find the same 2, 3, 5, and 10-year fixed-rate periods for buy-to-lets or any other type of mortgage.

Can I get a five-year mortgage deal with my new partner?

Upgrading to a joint mortgage isn’t a problem. It follows a very similar process to your initial mortgage application or remortgaging. Your lender will need the new joint account partner’s salary details, credit score, employment status, and factors you initially provided to create the new contract.

With an additional salary in the mix, you could apply for a higher loan amount, release equity, or opt for a shorter term, allowing you to pay off your mortgage sooner than anticipated.

Ask us about our 5-year fixed rate mortgages

As a leading UK mortgage broker, our expert advisors are ready to answer your questions and discuss your options for every kind of mortgage. So if you’re looking for a great new deal on a fixed-rate mortgage—especially a five year fixed mortgage—we’re here to help you get it. We’ve got years of industry expertise and have relationships with some of the most specialised lenders in the market.

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