What is a 5 year fixed rate mortgage?

With a 5 year fixed rate mortgage, you’ll pay the same interest rate on your mortgage for a fixed period of 5 years. 

This means your monthly repayment won’t change for 5 years.

You can also get fixed rates for longer or shorter periods of time, such as 2 year fixed or 10 year fixed.

Should I get a 5 year fixed rate mortgage?

It can be tempting to choose a 5 year fixed rate as you can be sure your mortgage payments will stay the same for 5 years.

However, this could still end up being more expensive than opting for a shorter fixed term or a variable rate mortgage.

Pros

  • you pay the same rate of interest for 5 years

  • you get financial certainty about what you have to pay every month

  • you won’t be affected by any increase to the Bank of England base rate

Cons

  • 5 year fixes can have more expensive upfront fees

  • 5 year fixes can have larger early repayment charges, which might outweigh any savings you could make if you decide to switch deals or move house

  • if interest rates drop you won’t benefit from a lower rate

Should I get a 5 or 2 year fixed rate mortgage?

2 year fixes usually have lower interest rates than 5 year fixes, but in recent years the gap between the two options has narrowed.

From January to June 2019 the average 2 year fix fell by 0.03% from 2.52% to 2.49%. 

In that same time the average 5 year fix fell by 0.09% from 2.94% to 2.85%.¹

For those looking to fix for 5 years, this is good news. It means that you won’t pay a great deal more for the extra years of a secured rate.

Should I get a 5 or 10 year fixed rate mortgage?

When deciding between a 5 or a 10 year fixed rate there are several things you should think about.

Choose a 5 year fix if:

  • you want more stability than 2 years but aren’t sure you’ll be living in the same property for more than 5 years

  • you think your financial circumstances could fluctuate 

Choose a 10 year fix if:

  • you plan on staying in the same property for a long period of time 

  • you don’t think your circumstances will change much in the 10 years fixed period

  • you want the security of a steady rate for 10 years

How to get the best 5 year fixed rate mortgage

To get the best 5 year fixed rate mortgage you should look out for all the fees and expenses that may come with it.

Low interest rates

To keep your monthly mortgage payment costs down, choose a deal with lower interest rates.

Putting down a larger deposit is the best way to gain access to the lowest interest rates. So think about saving a bit more for a bit longer before looking for a mortgage.

Fees

Low interest rates are great, but you also need to make sure you don’t ignore high early repayment fees or setup fees.

These could come to thousands of pounds, so check with a broker who can help you source a suitable deal. They’ll be able to inform you along the way so you aren’t caught off guard by fees in the future.

Check if it’s portable

If you want to avoid pesky early repayment charges you should keep an eye out for mortgage deals that are portable.

This way you have the option of moving your mortgage deal to a new property rather than paying any ERCs.

Compare different deals to find the 5 year fix that best suits you and your needs.

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Your home could be repossessed if you don't keep up repayments on your mortgage.

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