Fixed-rate mortgages
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Last reviewed by John Fraser Tucker on 21st November 2023
What is a fixed-rate mortgage?
A fixed rate mortgage is exactly that: fixed. The interest rate doesn’t rise or fall within an agreed period of time, so you know from the start what you’re going to pay each month.
Most of the best priced fixed-rate mortgages are the shorter term deals, but you can get fixed-rate mortgages that last 2, 3, 5, 7, 10 years, or in some cases, even longer.
When the fixed-rate ends, you’ll continue paying your mortgage, but on the SVR rate - or standard variable rate of interest - which each lender sets themselves and is usually much higher. Many people remortgage to avoid this.
How does a fixed-rate mortgage work?
Fixed-rates are initial tie-in periods with a lender where they promise not to change your interest rate, possibly for 5 years, for example. A fixed or tie-in period, sometimes referred to as an introductory period is not a legal restriction, more of a financial one.
You can, theoretically, leave a fixed-rate deal any time you like, but it would cost you to do so. Lenders charge ERCs (early repayment charges) if you leave a fixed-deal term before the end date. This is why most people consider themselves tied to the deal.
In some cases, it can be cheaper to pay the ERCs if you’ve seen a particularly competitive deal elsewhere. However, it does depend on how high the ERCs are, which is usually linked to how close you are to the end of the deal.
Should I fix my mortgage now?
It depends on your circumstances. It may be a good time to look at a fixed-rate mortgage if:
You’re on a variable rate that’s rising and/or expected to rise further
You see a much cheaper rate available than the one you’re currently on or competition between lenders is generally high
Your equity has increased a lot since you bought your home - this could give you access to better rates
You’re coming to the end of an existing introductory period
How do I get the best fixed-rate mortgage?
Getting the cheapest fixed rate mortgage might not necessarily equate to getting the best fixed-rate mortgage, as you’ll also need to consider whether the terms and conditions suit you.
In terms of getting the most competitive rates available to you, however, there are a few things you can do to tip the scales in your favour:
Wait until you have a decent amount of equity - this will lower the LTV of your borrowing, meaning more competitive rates are available
Think about the length of fix you need - shorter fixes can be (but aren’t always) a bit cheaper than longer ones
Speak to a knowledgeable free mortgage broker like ourselves - we’ll weigh up whether paying arrangement fees are worth paying a slightly higher interest rate for in the long term. We also may have access to deals that you’re unable to access without a broker
What is the best 2 year fixed-rate mortgage?
At the current time, the average 2-year fixed rate remortgage rate at 75% LTV is: and the best currently on offer is:
Get in touch to see what rate you qualify for
What is the best 5-year fixed-rate mortgage?
At the current time, the average 5-year fixed rate remortgage rate at 75% LTV is: and the best currently on offer is:
Get in touch to see what rate you qualify for
Can I get a 10 year fixed-rate mortgage?
Yes, some lenders offer 10 year fixed-rate deals, and some even longer. However, keep in mind that the longer the fix, the higher the rate is likely to be. This is because you’re paying for a longer period of certainty that your repayments won’t rise.
At the current time, the average 10-year fixed rate remortgage rate at 75% LTV is: and the best currently on offer is:
Get in touch to see what rate you qualify for
How do I decide how long to fix for?
There are a few things to think about here:
How long do you want to stay put? Longer fixes tend to have higher ERCs and it will be more expensive to leave them if you suddenly decide you want to move house, and end up needing to remortgage
Do rates look like they’re heading down? If so, you may miss out on lower rates later, particularly if you’re tied into a longer fixed-deal
How important is it that your repayments stay the same? Fixed-rates are best for those without much wiggle room in their finances. If you have a bit more flexibility, a short-term tracker might save you money
How does it differ from a variable rate mortgage?
The difference between a fixed and variable rate mortgage is very simple - a fixed rate can’t change during the deal period, a variable rate can.
Both work and are repaid in exactly the same way, regardless of the interest rate type.
What happens when my fixed-rate mortgage ends?
You’ll automatically be transferred onto the lender’s SVR, unless you choose to remortgage at the end of your fixed-rate deal period.
SVRs are notorious for being the highest rate a lender offers, but they do have some benefits. For example, you don’t need to pay to leave them, and usually there is no limit on the overpayments you can make.
Most people choose to remortgage to a new deal to avoid the higher interest rate, however. But keep in mind that doing this every 2 years over the duration of a 30 year mortgage could end up more expensive than simply taking a longer term fixed-rate. There are usually at least some fees to pay each time you remortgage to a new deal.
Can I get a new fixed-rate mortgage early?
Yes you can, in fact, it’s best to try and set up your new rate at least 3-6 months before your current one ends.
Not many people know about this, but it’s the best window to get a remortgage. With most lenders the new deal offer will be valid for 6 months, which means you can lock it in, and it will be ready to go when your current deal ends.
What’s more, if you see a better deal in the meantime, you can switch again. You’re not tied to the new deal until your old one ends. This gives you the flexibility to lock in a low rate before rates rise, but not to miss out if they fall.
If you remortgage with us, we’ll give you free access to our mortgage rate checker. We'll send you a monthly update to let you know if your chosen lender has reduced rates, so you can potentially get a cheaper deal.
What are the main advantages vs. disadvantages of fixed-rate mortgages?
All mortgages have their pros and cons, and how they impact you depends on your circumstances and what you want to get out of your mortgage.
Some of the benefits of a fixed-rate mortgage are:
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Confidence your payments won’t go up - making it easier to budget month to month
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You can choose your deal term length, usually 2, 3 or 5 years, but they can be longer
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You won’t need to worry about the base rate and what’s happening with mortgage rates until it’s nearing the end of your deal term
Some negatives are:
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The equivalent length variable rate deal is usually a bit cheaper, at least to begin with - although it’s not guaranteed to stay that way
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If interest rates fall across the board, you could be missing out on a cheaper rate - especially if your ERCs are particularly high
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The upfront fees can be larger to arrange a fixed-rate mortgage, than other mortgage types
How do I decide how long to fix for?
There are a few things to think about here:
How long do you want to stay put?
Longer fixes tend to have higher ERCs and it will be more expensive to leave them if you suddenly decide you want to move house, and end up needing to remortgage
Do rates look like they’re heading down?
If so, you may miss out on lower rates later, particularly if you’re tied into a longer fixed-deal
How important is it that your repayments stay the same?
Fixed-rates are best for those without much wiggle room in their finances. If you have a bit more flexibility, a short-term tracker might save you money
Read our detailed guide on how long you should fix a mortgage for.
Fixed-rate mortgage FAQs
Yes you can - but you’ll usually need to remortgage or do a product transfer with your existing lender.
Usually, yes. Although many lenders do tend to offer free legal services or valuations for remortgage applications. You may even find completely fee-free remortgage deals, but this will usually be compensated for with a higher interest rate
There’s not really a longest, as some lenders let you fix for the entire length of your mortgage - which can be as long as 40 years. However, these are not commonly available.
Keep in mind, though, the longer the fix, the higher the interest rate is likely to be. And the more you’ll usually need to pay in ERCs to leave the deal if you need to. Even top economists sometimes struggle to accurately predict interest rates over the next few years, so trying to imagine what they’ll be in 20 or 40 is near impossible.
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