3-Year Fixed-Rate Mortgages

Three-year fixed-rate mortgages are less prevalent than two or five-year fixes, but a number of lenders are offering them. Here, you will learn how three-year fixed-rate mortgages work, how they compare to the alternatives, and more.

What is a three-year fixed-rate mortgage?

A three-year fixed-rate mortgage is a mortgage with an introductory rates period that you can lock yourself into for three years. While you are ‘fixed in’, the interest rate payable will be lower than the lender’s standard variable rate (SVR) and cannot change during this period.

When the three-year initial rates period is up, you will be placed onto your lender’s SVR, unless you agree to fix back in with them in advance or remortgage with another lender.

Some of these mortgage deals come with product fees attached and others are fee-free. Generally speaking, deals with an upfront fee have a lower rate.

Are three-year fixes harder to come by?

They can be more difficult to secure than two-year or five-year fixed rate mortgages as fewer lenders offer them. Two-year fixes are the standard short-term offering at most mortgage providers in the UK, and five-year fixes are your typical medium-term option.

A smaller number of lenders offer three-year fixes as a middle ground, and the eligibility criteria and loan-to-value (LTV) requirements for these deals are generally no different.

Speaking to a mortgage broker before you apply for a three-year fixed-rate mortgage is highly recommended. Our brokers have access to the entire market and can round up every lender offering this option for you, and help you narrow your search to the best deals for you.

Average interest rates on 3-year fixes

At the time of writing (August 2024), average rates on three-year fixed-rate mortgages are similar to two-year fixes, which currently sit at 4.93%. It is, however, important to note that rates of under 4.5% or less are available to borrowers with a healthy deposit.

The exact rate that you qualify for will depend on factors including the LTV ratio (which you can improve by putting down extra deposit) and the condition of your credit reports. Prospective borrowers should also note that interest rates are always subject to change.

The lowest rates available right now

The lowest interest rates for 3-year fixed-rate mortgages, at the time of writing, kick in at 60-75% LTV, meaning you will need 25-40% deposit to qualify for them.

The table below shows examples of the rates you could take advantage of with that amount of deposit to put down, from a handful of the UK’s leading mortgage providers.

Please note that the information in the table above was accurate at the time of writing (August 2024) but all rates and deals listed are subject to change.

The table we have provided here is purely for example purposes and merely offers a snapshot of a wide market for 3-year fixed-rate mortgages. There are many more lenders than this available, each offering a range of 3-year fixes for borrowers with various LTVs.

You can compare all of the deals currently available and compare how they stack up against longer and shorter fixes, as well as variable rate mortgages, for free on Teito.

How to compare 3-year fixed-rate mortgages

You can browse three-year fixed-rate mortgage deals to see how the rates compare to longer and shorter fixes, as well as variable-rate mortgages, for free on Teito.

Once you have selected the kind of mortgage you want, one of our expert mortgage brokers will look over your case to offer bespoke advice, make sure you’re getting the best deal available and ensure the application process goes smoothly.

Below you can choose whether to compare mortgage rates or speak to one of our brokers first:

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Interest-only mortgages

Interest-only mortgages can be taken out on a three-year fixed-rate basis. Mortgage lenders who offer this type of mortgage usually give borrowers the option between capital repayment and interest-only, and the application process is largely the same for both types.

The main difference is you will need to evidence a repayment vehicle to get approved for an interest-only mortgage. This is essentially the method you will use to settle the mortgage debt at the end of the term - it could be a pension lump sum, investments, proceeds from the sale of another property or asset, or any other method that the lender approves of.

You can also remortgage from an interest-only mortgage to a capital repayment agreement, or vice versa - you can compare deals for both purchases and remortgages for free on Teito.

Buy-to-let mortgages

Available lenders for three-year fixed-rate mortgages are harder to come by in the buy-to-let market, as many providers’ product ranges are dominated by two and five-year fixes. There are, however, specialist lenders such as Accord Mortgages and Kensington, and high street banks including Santander, who do offer fixed-rate mortgages with initial terms of this length.

Speaking to a mortgage broker is recommended if you are looking for a three-year fixed-rate buy-to-let mortgage. Fewer approachable lenders means it can be difficult to secure a favourable deal, but a broker can open up a much wider pool of products for you.

You can compare buy-to-let mortgage rates and deals for free on Teito, and access support from a specialist broker at any point in the process if you need a helping hand.

Should you get a three-year fixed-rate mortgage?

The main advantages of a three-year fixed-rate mortgage is that they provide a medium-term option for borrowers looking for that middle ground between two and five-year fixes.

Whether to fix in for longer, shorter, or choose a variable rate mortgage can be the tricky part, so below we have listed some things to think about to help you answer these questions.

• The market forecast: expert commentary about which direction interest rates are likely to head in is readily available online. Remember, market forecasts are never an exact science, but if the general consensus is that interest rates are unlikely to fall for at least three years, this is something to factor in when pondering three-year fixes.
• Flexibility vs. consistency: Think about your own plans. Are you likely to need to move or remortgage within the next few years? If you were locked into a three-year fixed-rate, you can enjoy consistency during this time period and budget more effectively, but if you need to move or remortgage before this point, there could be extra fees to pay.
• Current deals available: The interest rates and fees on fixed-rate mortgages can vary depending on how long you lock yourself in for and whether you pay a product fee. It’s a good idea to have a whole-of-market mortgage broker compare fixed and variable-rate mortgage deals across the entire market for you and provide you advice about which is the most cost-effective option that will fit your requirements.

Why choose Teito for your mortgage needs?

You can compare three-year fixed-rate mortgages for free on Teito and access support from a whole-of-market broker to ensure you get the best deal available.

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

• Exclusive rates and deals are available
• Our brokers specialise in fixed-rate mortgages
• We are five-star rated on leading review websites
• It takes just minutes to secure your agreement in principle

Ready to compare rates and deals, and take advantage of a free, no-obligation chat with a whole-of-market mortgage broker? Get started here.