Five Year Fixed Rate

In a world of fluctuating interest rates are you looking for a reliable repayment plan? A fixed rate mortgage can fix the amount of interest you pay, for years to come.

But with such security comes a price and fixed rate mortgages can end up being slightly more expensive than a variable rate equivalent. So first, you’ll have to make sure a fix is definitely right for you.

What is a Fixed-Rate Mortgage?

A five year fixed-rate is simply a mortgage where the interest rate stays the same for five years. They offer static payments and protection from interest rate rises, but are slightly more expensive than variable rate mortgages.

Is a Five Year Fixed-Rate Right for Me?

If you are on a tight budget and/or don’t want to worry about the threat of rising interest rates a five-year fixed mortgage might be for you. They offer the security of knowing exactly what you’ll pay each month.

But you’ll pay a premium for this. Fixed rate mortgages carry slightly higher interest rates than tracker mortgages. So, if you are convinced interest rates won’t rise to an unaffordable level a tracker mortgage may be a cheaper option.

A five-year fix is one of the longer fixed-rate deals on the market, so only go with one if you believe that interest rates are likely to rise in the next five years, and you wouldn’t be able to afford larger mortgage repayments.

Use our mortgage rate index to get the very latest rate predictions to help you make an informed decision.

The Pros and Cons of Fixing

Pros

  • Security. If the base rate rises, your interest rate, and your payments, won’t follow it.
  • Forward planning. Knowing exactly what you’ll pay every month for five years, allows you to budget better.
  • Savings. If rates go up you could end up repaying a lot less than someone on a variable rate mortgage.

Cons

  • Expensive. A five year fix will tend to have a higher interest rate than variable rate mortgages, as you pay a premium for locking in an interest rate.
  • No chance of falling payments. A five-year fix will protect you in case interest rates rise, but you may end up paying over the odds if rates fall.
  • Locked in. If you want to remortgage or move before your five years are up you’ll have to pay to get out of your mortgage deal.
  • Admin fees. The lowest rate fixes usually come with higher arrangement or mortgage set up fees.