Our Pick Of The Best Five-Year Fixed Rate Mortgages
Fixing in your mortgage rate can hold great appeal. It offers greater security around your monthly household costs, peace of mind and – potentially – even value for money. But what length of fix should you take? For those looking for medium-term security and are not planning a house move in the near future, a five-year deal is one option to consider.
- Our top 5-year fixed rate mortgages
- What’s our methodology?
- What are fixed rate mortgages?
- What 5-year mortgage deals are available?
- How does the loan to value ratio impact your five-year fixed-rate mortgage?
- What are the benefits of a fixed rate mortgage?
- Are there any drawbacks?
- What alternatives are there to five-year fixed rates?
- How does loan-to-value affect a 5-year fixed-rate mortgage?
- What alternatives are there to a five-year fixed rate mortgage?
Our top 5-year fixed rate mortgages
We worked with our mortgage partner, online broker, Better.co.uk, to identify what we believe to be the best lenders for five-year fixed rate mortgage deals. You’ll find more on how the lenders are ranked with our methodology, below.
It’s important to note that all of these deals require an excellent credit score as well as proven income and sufficient affordability for the loan.
* Rate refers to average (median) cost of ‘no-fee’ five-year fixed rate mortgages across all loan to value categories for remortgaging and purchase deals as offered by online broker, Better.co.uk in the last complete three months (data correct at 1 August 2024)
**Average number of days the lender took to process mortgage applications from submission to approval in the last three months. Data for Better.co.uk customers (overall average was 30 days), accurate on 1 August 2024. Approval times vary according to circumstances, application and the lender’s current performance, so the average quoted speed may not reflect your own experience.
*** Fairer Finance (customer experience scores) August 2024.
Better.co.uk compares mortgage deals from more than 100 lenders including all the major high street names. Although note that a handful of lenders including First Direct and Lloyds Bank do not work with brokers. While all information is correct at the time of writing, rates and deals are subject to frequent change.
What’s our methodology?
We obtained data from our mortgage partner Better.co.uk, showing which lenders have offered the lowest rates on five-year fixed rate mortgage deals over the last three months. We used the median average cost across all deposit levels (data correct from 1 August 2024).
To arrive at our Forbes star ranking, we also considered average mortgage approval times (from submission to offer) over the last three months and customer experience scores as determined by independent data provider, Fairer Finance (correct as of August 2024).
Mortgage offers at all lenders listed are valid for six months.
Bear in mind that these figures are just averages. Exact costs of any mortgage will vary according to your deposit level (or equity you have in your property), credit score, and whether you opt to pay a fee to access a cheaper rate.
Mortgage rates and offers also change frequently – lenders that have presented the best value over the last three months may not present the best value in the next three months.
A mortgage broker, such as Better.co.uk, can provide guidance on which options make the most sense for your circumstances.
*Average mortgage costs can vary between sources depending on how the data is gathered. Better.co.uk’s data refers to the average cost of the primary fixed rate mortgage recommendation that is issued to applicants based on their circumstances from its 100-plus panel of lenders.
The data counts remortgage and purchase loans but excludes SVRs, adverse credit, self-build and shared ownership. Data is collected at the end of each business day. Better.co.uk targets applicants with a good credit history.
Lower loan-to-values (under 85%) account for a significant portion of its business which can translate into cheaper loan rates. Its average fixed rate costs may therefore appear lower than some others quoted on the market.
What are fixed rate mortgages?
All mortgages come with an interest rate, which is the cost of borrowing from the bank. The rate can either be fixed or variable.
With fixed rate mortgages, the rate you pay remains static for an agreed period. With variable rate mortgages, the rate could go up or down from month to month.
Fixed rate mortgages can last one, two, three, five, seven, ten or even 15 years. Not every lender offers each of those terms – and two and five-year deals tend to be the most popular.
Analysis of the mortgage market by UK Finance, the body which represents lenders, shows that most mortgages (82% in England and Wales and 80% in Scotland, or more than 6 million mortgages in total) are on fixed rates, and typically they are fixed for between two and five years.
Homeowners wanting a fixed rate must decide how long to fix for. Decisions hinge on factors such as likelihood of moving house in the near future, attitude to risk and expected changes in finances or the economy.
It is also important to remember that, as with any mortgage, your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Government data (sourced from the Bank of England) in the graph below reveals the popularity of fixed rate mortgages (and in particular the growing popularity of five-year fixed rates), compared to variable rates, in recent years.
What 5-year mortgage deals are available?
You can find out the real-time costs of a five-year fixed rate mortgage by using our mortgage tables, powered by our mortgage partner Better.co.uk, below. You’ll need to enter your personal criteria, and whether it’s a new mortgage or a remortgage.
How does the loan to value ratio impact your five-year fixed-rate mortgage?
The loan to value (LTV) ratio is the size of your mortgage borrowing relative to the value of your property. For example, if your home is worth £350,000 and your mortgage is £280,000 then the loan to value ratio is 80%.
The LTV of your mortgage will affect the loan deal you can get and the fixed rate you’ll pay. Lenders tend to offer mortgage rates in LTV bands from 60% LTV, 75% LTV, 80% LTV, 90% LTV and 95% LTV.
Generally speaking the lower your LTV ratio the more competitive the mortgage deal you’ll be offered (which means lower fixed interest rates).
Borrowers with a high LTV (meaning they have a small deposit or equity in their home) will usually pay higher fixed rates.
What are the benefits of a fixed rate mortgage?
With a fixed rate deal homeowners know exactly how much they will pay each month for an extended period of time, making it easier to budget.
Fixed rate mortgages can also prove better value over time if mortgage rates rise during the course of the term. For many homeowners however, the choice to take a fixed rate is based more on the peace of mind that their mortgage payments won’t change.
Are there any drawbacks?
Borrowers won’t benefit from falling interest rates if they are locked into a fixed rate deal. The arrangement fees for taking out a fixed rate mortgage also need consideration. These fees tend to be most expensive on deals with the lowest rates, while the highest-rate fixes can charge no arrangement fee.
There are also stiff financial penalties (early repayment charges or ERCs) for ditching a fixed rate mortgage before the end of the agreed term.
What alternatives are there to five-year fixed rates?
Borrowers looking for a fixed rate mortgage can choose the term of their deal. For example you could choose to fix for two years, three years, five years, 10 years or even longer, depending on the deal. The fixed interest rate will vary depending on the length of the deal.
While longer term fixed rates bring certainty and can help with budgeting you could lose out if interest rates fall.
If you don’t want to fix your mortgage rate you could opt for a tracker rate or discounted variable rate loan. As the name says a tracker deal will track the Bank of England base rate, usually at a set margin above this rate. Discounted rates usually track the lender’s standard variable rate. Both trackers and discounted rates are variable and can rise and fall from month to month.
How does loan-to-value affect a 5-year fixed-rate mortgage?
The loan to value (LTV) ratio is the size of your mortgage borrowing relative to the value of your property. For example, if your home is worth £350,000 and your mortgage is £280,000 then the loan to value ratio is 80%.
The LTV of your mortgage will affect the loan deal you can get and the fixed rate you’ll pay. Lenders tend to offer mortgage rates in LTV bands from 60% LTV, 75% LTV, 80% LTV, 90% LTV and 95% LTV.
Generally speaking the lower your LTV ratio the more competitive the mortgage deal you’ll be offered (which means lower fixed interest rates).
Borrowers with a high LTV (meaning they have a small deposit or equity in their home) will usually pay higher fixed rates.
What alternatives are there to a five-year fixed rate mortgage?
Borrowers looking for a fixed rate mortgage can choose the term of their deal. For example you could choose to fix for two years, three years, five years, 10 years or even longer, depending on the deal. The fixed interest rate will vary depending on the length of the deal.
While longer term fixed rates bring certainty and can help with budgeting you could lose out if interest rates fall.
If you don’t want to fix your mortgage rate you could opt for a tracker rate or discounted variable rate loan. As the name says a tracker deal will track the Bank of England base rate, usually at a set margin above this rate.
Discounted rates usually track the lender’s standard variable rate. Both trackers and discounted rates are variable and can rise and fall from month to month.
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