Compare 5 year fixed rate mortgages

What is a 5 year fixed rate mortgage?

A five year fixed rate mortgage is a mortgage in which your interest rate is fixed at a set amount for the first five years. This can provide peace of mind as during those five years you will always know exactly what your repayments are.

Five year fixed rate mortgages are popular with borrowers keen to know exactly how much their monthly repayments will be for the next five years. Knowing exactly how much you'll be paying every month can make it much easier to budget and manage your finances; including working out how much money you will have left over for luxuries such as holidays.

An alternative to this mortgage type is a tracker or variable rate mortgage. This is a mortgage in which the rate moves up and down, usually in relation to changes to the Bank of England base rate.

Finding the best 5 year fixed rate mortgage

Choosing 5 year mortgage rates means not having to worry about rising interest rates pushing up your monthly repayments. However the interest rate can be higher than lower fixed rate terms.

Be sure to compare mortgages to find the best five year fixed rate deals for you. You can compare using a price comparison site like Uswitch or go to a free whole of market broker to find all the possible five year fixed deals available.

What happens when the five year fixed period is over?

Once you reach the end of a five year fixed rate mortgage term, your mortgage rate and payments are no longer fixed at the same level.

Unless you switch to a new fixed rate, discounted rate or tracker mortgage, you will usually be moved on to your mortgage lender's Standard Variable Rate (SVR). This could be higher or lower than the rate you paid during your fixed period. 

SVRs are rarely the most competitive rates available, which is why it’s a good idea to shop around for a cheap mortgage deal and remortgage onto a new rate when you come to the end of your five year term.

Disadvantages of a fixed rate mortgage

Five year fixed rate mortgages generally come with slightly higher interest rates and fees than shorter term fixed mortgages or tracker deals that follow the Bank of England base rate up and down. This is because you’re paying for the security of knowing your mortgage rate will not change for the next five years.

However, if interest rates go down during the five year term of your fixed rate mortgage, you could end up paying well over the odds. If you want to switch to a cheaper deal during the five years, you’ll usually have to pay a hefty Early Repayment Charge (ERC). This can more than wipe out any savings you could make by switching.

If you think there’s a good chance of interest rates falling in the next five years, you may therefore be better off choosing a two year fixed rate deal instead.