5 year fixed mortgages

What is a 5 year fixed rate mortgage? And how do you find the best 5 year fixed mortgage?

Your home could be repossessed if you don't keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage. Any savings will vary depending on personal circumstances.
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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 will not 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.

But it could still end up costing more than choosing a shorter fixed term or a variable rate mortgage.

Pros

The benefit of a 5 year fixed rate is that you:

  • pay the same rate of interest for 5 years

  • know what you have to pay every month

  • are not affected if there are changes to the Bank of England base rate

Cons

The downside to a 5 year fixed rate is that they:

  • can have more expensive upfront fees

  • can have larger early repayment charges. These could undo any savings you could make switching deals or moving home

  • will not benefit if interest rates drop

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

2 year fixes often have lower interest rates than 5 year fixes. Recently the gap between the two 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

This is good if you're looking to fix for 5 years. It means that you will not pay much more for the extra years of a secured rate.

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

Choose a 5 year fix if you:

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

  • think your financial circumstances could change

Choose a 10 year fix if you:

  • plan to stay in the same property for a long period of time

  • you do not think your circumstances will change much in the next 10 years

  • want 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 costs that may come with it.

Low interest rates

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

The best way to get lower interest rates is to put down a larger deposit.

Think about saving for a bit longer before looking for a mortgage.

Fees

Make sure you do not ignore high early repayment fees or setup fees.

These could come to thousands of pounds, you can get help to get a suitable deal if you check with a broker.

They’ll be able to tell you so you know what fees you may have to pay later.

Check if it’s portable

If you want to avoid early repayment charges (ERCs), look for portable mortgage deals.

This lets you move your mortgage deal to a new property rather than paying any ERCs.

Compare mortgage 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.

You may have to pay an early repayment charge to your existing lender if you remortgage.

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