What is a fixed-rate mortgage?
A fixed-rate mortgage charges the same interest rate for an agreed initial period, commonly two, five or ten years, regardless of what happens to the Bank of England base rate during that time.
Your monthly payment stays the same throughout the fixed period, which makes budgeting straightforward and protects you if interest rates rise.
Once the fixed period ends, you'll usually move onto the lender's standard variable rate unless you remortgage onto a new deal, so it's worth planning ahead of the switch date.
How does a fixed-rate mortgage work?
You choose a fixed term based on how much certainty you want and how long you expect to stay in the property or keep the same borrowing needs.
The rate you're offered depends on your deposit size, loan-to-value and the wider market at the time you apply, with longer fixes sometimes priced slightly higher for the extra certainty they provide.
Here's a fictional example:
Meet Nina, choosing between a two-year and five-year fix
Nina is remortgaging £220,000 and is deciding between a two-year fix at 4.35% and a five-year fix at 4.55%.
The two-year deal is cheaper monthly by about £20, but she'd need to remortgage again in two years, paying fresh fees and taking on rate uncertainty at that point.
She opts for the five-year fix for the extra stability, since she expects to stay in the property for at least that long and prefers not to think about remortgaging again soon.
What lengths of fixed-rate mortgage are available?
Two-year fix
Popular for its typically lower rate and flexibility to reassess the market sooner.
Means remortgaging again fairly soon, with fresh fees and rate risk at that point.
Five-year fix
A middle ground offering longer-term certainty without committing for a decade.
Often the sweet spot for buyers wanting stability through a mortgage stress test period and beyond.
Ten-year fix
Maximum payment certainty, useful if you strongly value predictability or expect rates to rise significantly.
Early repayment charges typically apply for the full period, which can be restrictive if your plans change.
Is a fixed-rate mortgage right for me?
A fix tends to suit borrowers who:
- 1
Value budgeting certainty
Knowing your exact payment each month makes household budgeting far easier.
- 2
Are risk-averse to rate rises
A fix protects you entirely from base rate increases during the term.
- 3
Plan to stay put for the fixed term
Early repayment charges can be costly if you need to move or remortgage before the fix ends.
What do I need for a fixed-rate mortgage?
Requirements are broadly the same as for other mortgages:
A deposit: From 5% upward, with better rates typically available above 10%, 15% and 25% loan-to-value.
Proof of income and affordability: Lenders assess your income against outgoings to confirm the fixed payment is comfortably affordable.
A reasonable credit history: Missed payments or high existing debt can limit which fixed deals you qualify for.
An acceptable property: The property must pass valuation and meet the lender's criteria on construction type and tenure.
Awareness of early repayment charges: Understanding the exit terms in case your circumstances change during the fix.
How to compare fixed-rate mortgages
Look past the headline rate and check these five things:
- 1
Initial rate vs the follow-on rate
A cheap two-year fix can revert to a lender's standard variable rate of 7% or more once it ends, so know the exit point before you sign.
- 2
Fees, not just the rate
A lower rate with a £1,999 product fee can cost more overall than a slightly higher fee-free deal, especially on smaller loans.
- 3
Overall cost over the deal period
Compare the true cost of the initial period — rate, fees and any cashback combined — rather than the rate in isolation.
- 4
Early repayment charges
Fixed and tracker deals typically lock you in with charges of 1-5% of the balance if you remortgage or overpay heavily before the term ends.
- 5
Flexibility
Look for free overpayment allowances (usually 10% a year), porting rights if you move home, and payment holiday options.
Fixed-rate mortgage pros and cons
Pros
- Payments stay the same for the fixed term
- Protects you from base rate rises
- Makes budgeting simple and predictable
- Available across a wide range of terms
Cons
- You don't benefit if rates fall during the fix
- Early repayment charges apply if you exit early
- Longer fixes can carry a slightly higher rate
- You'll need to remortgage or revert once the term ends
Two-year, five-year or ten-year fix?
A two-year fix suits those expecting rates to fall or who want flexibility to reassess their situation sooner, accepting the admin and fees of remortgaging again soon.
A five-year fix balances certainty with flexibility, and is a common choice for those planning to stay in a property for the medium term.
A ten-year fix suits borrowers who prioritise long-term certainty above all else, but the lock-in period means life changes — a move, a job change, a relationship change — can be expensive to navigate.
What happens if I can't keep up mortgage repayments?
Missing payments on a fixed-rate mortgage is reported to credit reference agencies and can ultimately put your home at risk, since the property is used as security for the loan.
Contact your lender as soon as you think you'll struggle. Under FCA rules, lenders must treat customers in financial difficulty fairly and can often offer a temporary reduced payment, a term extension or a short payment holiday.
Free, independent guidance is available from MoneyHelper and Citizens Advice, and speaking to your lender early keeps far more options on the table than waiting until arrears build up.
What are the alternatives to a fixed rate?
If a fix doesn't suit you, consider:
Tracker mortgage
Moves directly with the Bank of England base rate, which can be cheaper if rates are expected to fall.
Discount variable mortgage
A discount off the lender's standard variable rate, which can move independently of the base rate.
Offset mortgage
Uses your savings to reduce the interest charged, which can suit those with significant cash reserves.
FAQs
About this guide
Written and reviewed by the Grow Your Business team, and kept up to date as rates, rules and provider terms change.
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