What is a mortgage? Should I get a fixed-rate mortgage?

Fixed-rate mortgages

Fixed-rate mortgages can give peace of mind to homeowners

We explain the pros and cons of fixed-rate mortgages and reveal the best fixed-rate mortgage deals currently available.

With headline-grabbing deals in the news, you may be considering taking out a fixed-rate mortgage. For many, now is a great time to do so - but is it the right option for you?

  • The best mortgage for you will be heavily dependent on your circumstances. If you'd like to discuss your options with an impartial adviser, call Which? Mortgage Advisers on 0808 252 7987
  • Not sure what a fixed-rate mortgage is? Understand more with our guide to fixed-rate mortgages

Pros and cons of fixed-rate mortgages

Pros of fixed-rate mortgages

  • With a fixed-rate mortgage, your interest rate stays the same for a set period, meaning you pay the same amount every month for the duration of the deal. This is good if you want to know for sure how much your payments will be each month.
  • Being on a fixed interest rate means that you'll be unaffected by rate rises in the wider market (eg if the base rate is increased) for the duration of your fixed period.
  • We've recently seen some of the cheapest-ever fixed-rate mortgages hitting the market (see table, below).
  • While interest rates on 10-year deals can be higher than those for shorter-term fixes, you may end up paying less in the long run. Talk to a mortgage adviser if you're unsure.

Cons of fixed-rate mortgages

  • If interest rates fall elsewhere in the market you could end up paying more than you would have done with a different type of mortgage such as a tracker.
  • Already have a mortgage? Switching from your current deal to a new one isn't always a no-brainer, even if there are lower rates available than what you're currently paying. Many fixed-rate mortgages carry sizeable arrangement fees, plus you'd need to factor in valuation and solicitors' fees and any early redemption charges on your current mortgage.
  • If you're planning on moving house soon, you may wish to avoid tying yourself into a long-term fixed-rate mortgage unless it's portable, or you could face steep exit fees.
  • Given the current political uncertainty regarding leaving the EU and how long this will take, it’s worth considering how long you want to fix your mortgage for. Officially, the government will have to give the EU two years' notice - but they haven't done so yet. If and when we do exit, there may be more uncertainty in the market, which in turn might make it harder to get a mortgage.
  • The best fixed-rate deals are available to those who have a large deposit or amount of equity in their homes, and maximum loan-to-value ratios rule out a lot of customers (see tables below).

Best fixed-rate mortgage deals

In the tables below, we've listed the best deals currently available* based on interest rates. The first table shows the very best rates, which tend to only be available to people with big deposits, while the second reveals the best rates for those with deposits of 15% and above.

Don't forget that the interest rate is just one part of a mortgage. You should also consider fees and the lifetime cost of the loan (see how to compare mortgages for more). 

Best deals by initial rate
Fixed-term periodLenderInitial rateRate after fixed termRepresentative APRMinimum deposit sizeArrangement fee
Two yearsHSBC0.99%3.69%3.4%35% £1,499
Three yearsHSBC1.59%3.69%3.3%40%£749
Five yearsHSBC1.89%3.69%3.1%40%£749
10 yearsCoventry Building Society2.39%4.24%3.1%50%£999
 
Best deals by initial rate (maximum loan to value of 85%)
Fixed-term periodLenderInitial rateRate after fixed termRepresentative APRMinimum deposit sizeArrangement fee
Two yearsYorkshire Building Society1.53%4.74%4.4%15% £975
Three yearsLeeds Building Society1.99%5.44%4.8%15% £999
Five yearsLeeds Building Society2.35%5.44%4.5%15%£999
10 yearsNationwide Building Society 3.54%3.74%3.7%15%£999
*Mortgage rate data sourced from Moneyfacts on 27 September 2016. Where possible we've added links to deal details on Which? Money Compare. Only deals available directly have been included.

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Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.