5-Year Fixed-Rate Mortgages

Five-year fixed-rate mortgages are popular during times of low interest rates or when market uncertainty is believed to be on the horizon. In this guide, you will learn all you need to know about this type of mortgage, including how to get one.

What is a five-year fixed-rate mortgage?

A five-year fixed-rate mortgage is a type of mortgage agreement that allows you to lock yourself into a lower interest rate for a period of five years. During this timeframe, your mortgage rate cannot go up or down, even if the Bank of England’s base rate was to change.

When the initial rates period is over, the mortgage will revert onto the lender’s standard variable rate (SVR), which is usually higher. Borrowers can avoid this by either renewing their mortgage with their current lender in advance or remortgaging with another provider.

The main alternatives to these mortgages are longer or shorter fixes - with initial rates periods ranging between two and 10 years plus - or variable-rate mortgages, such as trackers.

Borrowers often choose five-year fixes during times of low interest rates, to take advantage of favourable market conditions while they last. They also prove popular when rates are forecast to rise over a long period, as they offer protection against this.

Options to consider when your fixed rate ends

Around six months before your initial rates period is due to expire, your lender is likely to contact you to encourage you to fix back in. This is just one of the options you will have at this point, and it pays to research in advance and be aware of the alternatives.

Your options when a five-year fixed-rate mortgage is up for renewal include:

Fix back in with your current lender

You could consider another fixed-rate mortgage with your existing mortgage provider, with the initial rates period of your choosing. Options typically range between two and five years, but your lender might be among those offering longer and shorter-term options too.

Change product type with your current lender

The main alternative would be to switch to a type of variable rate mortgage with your existing lender. It is worth noting what kind of deals they are offering on tracker mortgages or discount rate mortgages, if either of these product types fit your needs and circumstances.

Remortgage with a new lender

It is always a good idea to explore what kind of interest rates and deals are available across the whole of the market, whether you are looking to enter another fixed-rate mortgage or switch to variable arrangement. Remortgaging with a new lender could mean securing a lower interest rate or a mortgage agreement that is a better fit for your requirements.

Move onto your lender’s SVR

This should only ever be considered after taking professional advice, as SVR are usually expensive. It can, however, be an option if you are planning to pay off a substantial chunk of your mortgage before entering a new deal, or pay off all of your mortgage balance.

While you are fixed in, there is usually a cap on overpayments (typically 10% of the debt), and paying off your mortgage in full while locked in can mean paying an early repayment charge.

Unsure which option to choose? A mortgage broker can provide you with bespoke advice to help you decide. They also have access to the entire market, so if there is a better deal out there, you can rest assured that it will be on their radar.

What interest rates are available for 5-year fixes?

At the time of writing (August 2024), the average rate on a five-year fixed rate mortgage is 5.38%, according to data from moneyfacts - but keep in mind that securing a lower-than-average rate is realistic with a substantial amount of deposit.

Five-year fixed-rate mortgages with an initial interest rate of under 4.5% are readily available to borrowers with loan-to-value (LTV) ratios of 60-75% (or 25-40% deposit).

Traditionally, shorter fixed-rate mortgages generally come with lower rates than five-year deals, but in the current marketplace, 5-year fixes are generally lower.

How to compare rates and deals

You can compare rates and deals on five-year fixed rate mortgages for free on Teito. Once you have selected a deal you like the look of, one of our brokers will be on hand to offer bespoke advice, make sure you’re getting the best deal, and oversee your application.

Below you can choose whether to compare the latest rates or speak to one of our brokers before you proceed:

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Buy-to-let mortgages

Five-year fixed-rate buy-to-let mortgages are readily available and the benefits of them are the same as they are for residential mortgages. The main difference is that interest rates can be higher, as can deposit requirements. You are unlikely to be approved with less than 15-25% deposit to put down, and to get the best interest rate, you might need more.

You can read more about buy-to-let mortgages in our complete guide or compare rates and deals for 5-year fixed-rate buy-to-let mortgages for free on Teito.

Interest-only mortgages

Some five-year fixed-rate mortgages can be taken out on an interest-only basis, rather than capital repayment. This means that you would only have to pay the interest each month, fixed at a set rate for the initial five years, and settle the mortgage debt at the end of the term.

To get approved for an interest-only mortgage, you will need to evidence a repayment vehicle to your lender as a means of settling the debt. This would normally be an investment, a pension lump sum, or proceeds from another property you own, among other options.

You can read more about interest-only mortgages in our complete guide.

Offset mortgages

Offset mortgages with a five-year fixed-rate are not widely available as the majority of lenders offer two-year fixes as their main offering for this type of mortgage. There are, however, a smaller number of mortgage providers who will let you fix in for five years.

Rates on offset mortgages can be slightly higher than standard residential, but if you have a substantial amount of savings to offset your mortgage against, they can be worthwhile.

Speaking to a broker is highly recommended if you are looking for a five-year fixed-rate offset mortgage, as they will be able to round up every lender currently offering them and help you secure the best deal. You can read more about offset mortgages in our complete guide.

Why choose Teito for your mortgage needs?

You can compare rates and deals on five-year fixed-rate mortgages for free on Teito and access support from a whole-of-market mortgage broker, if you need a little help.

Here are just some of the reasons why our customers choose us:

• You can compare 5-year fixed-rate deals in seconds
• Our brokers are whole-of-market
• We are five-star rated on leading review websites
• You can secure an agreement in principle in minutes

Ready to compare rates and deals and take advantage of a free, no-obligation chat with a broker who specialises in fixed-rate mortgages? Get started here.