Fixed rate mortgages are the most popular mortgage type in the UK, chosen by the vast majority of homebuyers and remortgagers. By locking your interest rate for a set period, you get the certainty of knowing exactly what you’ll pay each month — regardless of what happens to interest rates in the wider economy.
How a Fixed Rate Mortgage Works
When you take a fixed rate mortgage, your interest rate is set at the outset and does not change for the duration of the fixed period. This means your monthly payment stays the same, whether the Bank of England raises or lowers interest rates.
| Component | Example |
|---|---|
| Fixed interest rate | 4.50% |
| Mortgage amount | £200,000 |
| Term | 25 years |
| Monthly payment | £1,111 |
This payment remains exactly £1,111 for the entire fixed period. After the fix ends, you move onto the lender’s standard variable rate unless you remortgage to a new deal.
Fixed Rate Periods Compared
| Feature | 2-Year Fix | 5-Year Fix | 10-Year Fix |
|---|---|---|---|
| Payment certainty | 2 years | 5 years | 10 years |
| Typical rate | Often lowest | Slightly higher | Higher |
| Arrangement fee impact | Fee spread over 2 years | Fee spread over 5 years | Fee spread over 10 years |
| Flexibility | Remortgage sooner | Less frequent changes | Long commitment |
| ERC period | 2 years | 5 years | 10 years |
| Best for | Uncertain plans | Most borrowers | Long-term stability |
2-Year Fixed Rate
The shortest standard fix. It allows you to revisit your mortgage sooner, which is useful if you think rates might fall, if your circumstances might change, or if you want to reassess frequently.
Consideration: You will pay remortgage costs (valuation, legal, product fees) more frequently — potentially every two years — which adds up over time.
5-Year Fixed Rate
The sweet spot for most borrowers. Five years of payment certainty allows you to plan ahead with confidence, and the slightly higher rate compared to a two-year fix is usually offset by:
- Fewer remortgage fees over time
- Longer protection from rate rises
- Less stress about tracking mortgage markets
10-Year Fixed Rate
Maximum certainty for borrowers who plan to stay in their home long-term. Rates are typically 0.3–0.5% higher than five-year fixes, reflecting the lender’s increased risk from fixing for longer.
Watch out for ERCs — if you need to leave a 10-year fix early, the charges can be substantial. Some lenders offer 10-year fixes where ERCs drop off after five years, which provides a middle ground.
What Determines Fixed Mortgage Rates
Fixed mortgage rates are influenced by several factors:
- Swap rates — the rates at which banks lend to each other for fixed periods. These are the primary driver of fixed mortgage pricing
- Bank of England base rate expectations — if markets expect the base rate to rise, swap rates (and therefore fixed mortgage rates) increase
- Lender competition — in a competitive market, lenders may accept thinner margins to attract borrowers
- Your loan-to-value ratio — the more equity you have, the lower the rate you’ll typically be offered
- Your credit history — borrowers with clean credit reports access the best rates
Costs Beyond the Interest Rate
The headline rate is important, but it is not the whole picture. You also need to consider:
Arrangement Fee
Also called a product fee, this is typically £500–£2,000 for competitive fixed rates. The lowest rates almost always carry higher fees. You can often add the fee to your mortgage balance, but you’ll then pay interest on it for the full term.
Valuation Fee
Some lenders charge for the property valuation (£150–£500), while many competitive deals include a free valuation.
Legal Fees
When remortgaging, many lenders offer free legal work as part of the deal. For purchases, you will need to pay your own solicitor — typically £1,000–£2,000.
True Cost Calculation
Always calculate the total cost of the deal over the fixed period, including fees:
| Deal | Rate | Monthly Payment | Total Payments (5 years) | Fee | Total Cost |
|---|---|---|---|---|---|
| Deal A | 4.20% | £1,084 | £65,040 | £1,500 | £66,540 |
| Deal B | 4.50% | £1,111 | £66,660 | £0 | £66,660 |
| Deal C | 4.00% | £1,063 | £63,780 | £2,000 | £65,780 |
In this example, Deal C has the lowest total cost despite having the highest fee, because the lower rate generates enough savings to more than offset it.
Early Repayment Charges
If you repay all or part of your mortgage during the fixed period (beyond any overpayment allowance), you will face an early repayment charge. ERCs typically work as follows:
| Year of Fix | Typical ERC |
|---|---|
| Year 1 | 5% of balance |
| Year 2 | 4% of balance |
| Year 3 | 3% of balance |
| Year 4 | 2% of balance |
| Year 5 | 1% of balance |
On a £200,000 mortgage, a 5% ERC is £10,000. This is why it is important to choose the right fix length from the outset. Most lenders allow overpayments of up to 10% per year without triggering an ERC — use our mortgage overpayment calculator to see the impact.
How to Get the Best Fixed Rate
- Maximise your deposit or equity — the best rates are reserved for 60% LTV or lower. Use our LTV calculator to check yours
- Improve your credit score — a strong credit report unlocks the most competitive deals
- Compare total cost, not just rate — factor in fees, cashback, and free valuations
- Use a mortgage broker — brokers access deals from across the market, including exclusive rates not available direct
- Lock in early — most offers last six months, so secure your rate well before your current deal expires
- Consider overpayment flexibility — a slightly higher rate with 20% annual overpayment allowance may save more than the lowest rate with only 10% allowance