Fixed rate mortgage deals

What is a fixed rate mortgage?

A fixed rate mortgage is where the interest rate stays the same for the length of your fixed rate mortgage term. One big advantage of this type of mortgage is that you’ll know exactly how much your monthly repayments will be for the fixed rate period.

Fixed rate mortgages come in different term lengths, meaning that the length your payments are fixed for can last for a different number of years. The main term lengths are 2, 3, 5 and 10 years, although you could get longer terms depending on the lender. They will come with different interest rates, different early repayment charges (ERCs) and different fees, but the principle remains the same. Whatever length you choose, your mortgage repayment amount will stay the same for that amount of time.

How do fixed rate mortgages work?

Once you’ve decided on a fixed rate mortgage length and you’ve had your mortgage approved, you’ll start paying off your mortgage. Because you’ve gone for a fixed rate, these payments won’t change for the duration of your deal.

When your fixed rate mortgage comes to an end, it’ll switch onto your lender’s ‘Standard Variable Rate’ (SVR). This is normally higher than your fixed rate, so you could start looking for a new mortgage about 4 months before the end of your deal to avoid this. If you need help finding the best deal, speak to an L&C adviser a few months before the end of your deal and we’ll make sure you’re still getting the best mortgage rate for your circumstances.

Some fixed rate mortgages are ‘portable’. This means if you move home during your fixed rate mortgage and still have time left before the deal comes to an end, you could move the mortgage to your new home. You can still move even if your mortgage isn’t portable, but you might have to pay your lender’s ERC. An ERC can be 3% or more of your total mortgage balance, so it’s important to choose your fixed rate length carefully.

What fixed rate mortgage term is right for you?

2 year fixed rate mortgages

A 2 year fixed rate mortgage is normally the shortest fixed rate mortgage available.

Our customers have taken a 2 year deal because they:

• Think rates might drop soon and want the freedom to switch quickly.
• Expect a change in their situation, like moving home, getting a pay rise or paying off other debts.
• Want to get onto the property ladder fast and plan to remortgage once they’ve got more equity.
• Prefer not to commit for long until they’re sure the property or lender suits their needs.
• Are confident they’ll keep an eye on the market and don’t mind reviewing the deal every 18 months or so.

Because a 2 year fixed rate mortgage is such a short deal length, it gives you the chance to switch to another mortgage deal after a relatively short period without ERCs.

2 year fixed rate mortgages are often the cheapest deal on the market, but you will have to remortgage earlier than other term lengths, which has costs associated with it.

3 year fixed rate mortgages

A 3 year fixed rate mortgage is the next term length offered by lenders. Our advisers have found that these deals suit people who are trying to find that balance between flexibility and security, and:

• Want more breathing space than a 2 year deal but aren’t ready to lock in for five years.
• Expect life changes in the near future, like starting a family or changing jobs.
• Think rates might move a little but not drastically, so they’re balancing risk and flexibility.
• Have young children who may need to move schools.
• Want to avoid frequent remortgaging costs but still keep some control over their timings.
• Like a “middle-ground” approach, stable, but not long-term.

This type of mortgage tends to be slightly more expensive than a 2 year deal and may come with ERCs if you find yourself having to move earlier than planned.

5 year fixed rate mortgage

A 5 year fixed rate mortgage is a good intermediate option. Our research has shown it can be a great length for people who:

• Have children in school as it gives them some long-term stability.
• Value payment stability and don’t want to worry about rates for a good few years.
• Want predictable monthly costs to help with family budgeting or longer-term plans.
• Believe rates are likely to rise and want to lock in before that happens.
• Don’t plan to move or make big financial changes in the near future.
• Prefer fewer remortgages and the costs or stress that come with them.

Again, it’ll generally be more expensive than 2 or 3 year deals and will most likely come with ERCs. Some 5 year deals might be portable but that will be at the lender’s discretion.

The best 5 year fixed rate mortgages may come with higher arrangement fees, so it’s important to factor these in when working out the overall cost of any deal.

10 year fixed rate mortgage

A 10 year fixed rate mortgage could be a good option if you’re happy with the offered mortgage rate, know your circumstances won’t change dramatically in the next ten years and want to protect yourself from future rate rises.

Our customers have gone for 10 year fixed rate mortgages because they:

• Want long-term certainty and peace of mind about their monthly payments.
• Are settled in their “forever home” and don’t expect to move soon.
• Worry about future interest rate rises and would rather avoid the risk altogether.
• Like knowing exactly what they’ll pay well into the future, especially if they’re planning around education or retirement.
• Prefer to “set it and forget it,” even if it means paying a little more for that security.

Getting the best 10 year mortgage deal will depend on how much flexibility you want over the next decade. You’ll need to think carefully about whether your circumstances are likely to change over time.

Some 10 year fixed mortgages are portable, so you may be able to transfer your deal to a new property if you move home during the policy period. You will have to re-apply for your mortgage however, and your lender will carry out new affordability checks along with a valuation of the new property.

Deciding what fixed rate term will be best for you?

When choosing how long to fix your mortgage for, it helps to think about a few key things. Start by looking at the total cost, not just the interest rate. Shorter deals can seem cheaper at first but might cost more once you factor in remortgaging fees.

Your future plans matter too; if you think you might move, change jobs, or start a family, a shorter term could give you more flexibility. It’s also worth thinking about your financial situation and how much certainty you’d like with your payments. If your income is steady and you prefer predictable costs, a longer fix can make budgeting simpler.

Finally, consider how comfortable you are with risk. If you’d rather not worry about rising rates, fixing for longer can offer valuable peace of mind.

What you’ll need to apply for a fixed rate mortgage

To get the best fixed rate deal you have to show lenders you can afford the monthly payments. They’ll usually ask for:

• 3 - 6 months of pay slips
• 6 months of bank statements
• Proof of any benefits received
• P60 from your employer
• Utility bills
• Tax returns or accounts if you’re self-employed

Why use an L&C mortgage adviser

Your L&C mortgage adviser has access to over 90 lenders and 1000s of deals, so you can be confident they’ll find the best deal for your mortgage. You’ll can also:

• Compare mortgage rates online in minutes
• Use our Mortgage Finder to see deals you're most likely to qualify for
• Get advice and guidance at every step of the journey

From your first search through to application and approval, your L&C mortgage adviser does the legwork, so you don’t have to.