Best 5 year fixed rate mortgages UK: complete guide 2024

Current best 5 year fixed rate mortgage deals
Top UK mortgage lenders comparison
Fixed rate vs variable rate mortgages
First time buyer mortgage requirements
How to apply for a fixed rate mortgage

Current best 5 year fixed rate mortgage deals

As we enter December 2024, several leading UK lenders are offering competitive 5-year fixed rate mortgage deals. Let’s examine the best options currently available on the market.

HSBC

Currently offering one of the most competitive rates, HSBC provides a 5-year fixed rate mortgage starting at 4.13% for their standard option and 4.10% for premier customers. The mortgage comes with a £999 standard fee or £1,499 for premier customers, with rates reverting to 6.99% after the fixed term. Learn more about HSBC’s current mortgage rates.

NatWest

NatWest offers several attractive options, including their Moving Home Online Fixed rate at 4.34% with a 60% LTV (Loan to Value ratio). They also provide a 4.55% rate at 60% LTV and 4.90% at 90% LTV. While the Moving Home Online Fixed rate includes a £1,495 product fee, some options come with no product fees.

Santander

Santander’s current offerings include a 5-year fixed rate at 4.30% with a £999 product fee for their Remortgage Fixed rate. First-time buyers can benefit from their 95% LTV option at 5.14% with no fee charges and a £250 cashback incentive. View detailed comparisons of current mortgage deals.

Coventry Building Society

Coventry Building Society provides competitive rates starting at 4.37% for their Remortgage Fixed rate with a 65% LTV. Existing members can access an even better rate of 4.29% with a £999 product fee. Their range includes various LTV options to suit different borrower needs.

Virgin Money

Virgin Money offers remortgage fixed rates beginning at 4.39% with a £995 product fee. Their competitive pricing and relatively lower product fee compared to some other lenders make them an attractive option for those looking to remortgage. Compare current mortgage rates across lenders.

Key considerations when choosing a deal

Interest rate and overall cost including fees
Loan to Value (LTV) requirements
Product fees and other charges
Eligibility criteria
Early repayment charges
Additional features such as cashback offers

When selecting a 5-year fixed rate mortgage, it’s crucial to consider not just the headline interest rate but also the total cost of the mortgage, including all fees and charges. The best deal for you will depend on your individual circumstances, including your deposit size, income, and whether you’re a first-time buyer, moving home, or remortgaging.

Top UK mortgage lenders comparison

When comparing the leading UK mortgage lenders offering 5-year fixed rate mortgages in 2024, several key factors need to be considered, including interest rates, customer service quality, and additional fees. Here’s a detailed analysis of the top providers:

Interest rates and fees comparison

HSBC currently leads the market with competitive rates starting at 4.13% for their standard option and 4.10% for premier customers. However, their product fees are higher at £1,499. HSBC’s mortgage rates revert to 6.99% after the fixed term.

Following closely, NatWest offers rates from 4.34% for their Moving Home Online Fixed rate with a 60% LTV, while Santander provides competitive rates starting at 4.30% with a £999 product fee for their Remortgage Fixed rate.

Customer service and reputation

According to recent broker satisfaction surveys, Atom Bank leads in customer satisfaction with an impressive 94.2% rating. However, they’re not currently among the top providers for 5-year fixed rates.

Traditional banks like HSBC, NatWest, and Santander maintain strong reputations despite having varying customer service ratings. Coventry Building Society and NatWest have recorded higher percentages of upheld complaints, potentially indicating areas for improvement in their customer service.

Additional features and benefits

Santander offers £250 cashback for first-time buyers on their 95% LTV products
HSBC provides special rates for premier customers
NatWest offers fee-free options on some products
Coventry Building Society provides flexible LTV options

Product flexibility

Different lenders offer varying levels of flexibility in their mortgage terms. Most major UK lenders provide options for different LTV ratios, ranging from 60% to 95%, with corresponding rate adjustments. Early repayment charges and arrangement fees also vary significantly between lenders.

When choosing between lenders, it’s essential to consider not just the headline rate but also product fees, flexibility in terms, and the overall cost of the mortgage over the five-year fixed period. The best choice will depend on individual circumstances, including deposit size, income, and specific requirements.

Fixed rate vs variable rate mortgages

When considering a mortgage in the UK, one of the most crucial decisions is choosing between a fixed rate and a variable rate mortgage. Understanding the key differences and implications of each option is essential for making an informed decision that aligns with your financial goals.

Understanding fixed rate mortgages

A fixed rate mortgage locks in your interest rate for a specified period, typically five years. This means your monthly payments remain constant throughout the fixed term, regardless of changes in the Bank of England base rate or market conditions. According to recent data from Uswitch, 5-year fixed rates currently start from around 4.13% for those with larger deposits.

Benefits of fixed rate mortgages

Predictable monthly payments for better budgeting
Protection against interest rate rises
Peace of mind knowing exactly what you’ll pay
Easier long-term financial planning

Understanding variable rate mortgages

Variable rate mortgages have interest rates that can change over time, typically in response to movements in the Bank of England base rate. These mortgages come in several forms, including tracker mortgages and standard variable rate (SVR) mortgages.

According to SovereignBoss, while variable rates might start lower than fixed rates, they carry the risk of increasing if interest rates rise, potentially making monthly payments less affordable.

Benefits of variable rate mortgages

Potentially lower initial rates
Ability to benefit from interest rate decreases
Often have lower early repayment charges
More flexibility to switch mortgage products

Making the right choice

Your decision between a fixed or variable rate mortgage should depend on several factors:

Your attitude to risk and financial stability
How long you plan to stay in your property
Your ability to cope with potential payment increases
Current market conditions and interest rate forecasts

For many borrowers, particularly first-time buyers or those seeking payment stability, a 5-year fixed rate mortgage offers an attractive balance between security and value. However, those comfortable with some uncertainty and willing to monitor market conditions might find better value in a variable rate mortgage.

The current market trend shows that approximately 90% of new mortgages are taken on a fixed rate basis, with MPA reporting this is largely due to the economic uncertainty and desire for payment stability among UK homeowners.

First time buyer mortgage requirements for 5-year fixed rates

For first-time buyers looking to secure a 5-year fixed rate mortgage in the UK, understanding the key eligibility requirements is crucial. Let’s explore the essential criteria that lenders typically evaluate when considering mortgage applications.

Credit score requirements

While there’s no universal minimum credit score requirement in the UK, a higher score typically improves your chances of securing better mortgage rates. Most lenders will conduct a thorough credit check to assess your creditworthiness and financial reliability. Maintaining a good payment history and managing existing credit responsibly can significantly strengthen your application.

Income and affordability criteria

Lenders typically require a stable income to ensure you can afford the mortgage repayments. Most will consider lending between 4.5 to 5 times your annual income. For example, if you earn £30,000 per year, you might be able to borrow between £135,000 and £150,000, depending on the lender’s specific criteria. Additional income sources, such as bonuses or overtime, may also be considered.

Deposit requirements

The minimum deposit requirement for first-time buyers is typically 5% of the property value, though larger deposits often secure better interest rates. For example:

5% deposit: Higher interest rates, fewer lender options
10% deposit: More competitive rates, wider choice of lenders
15-20% deposit: Access to the most competitive rates

Employment status and history

Most lenders prefer applicants with a stable employment history. If you’re employed, you’ll typically need to provide:

Last 3-6 months of payslips
Previous 2-3 years of employment history
Latest P60 form
Bank statements from the last 3-6 months

Self-employed applicants may need to provide additional documentation, including tax returns and business accounts for the past 2-3 years. Lenders will carefully assess your income stability and business performance.

Additional eligibility factors

Other important factors that lenders consider include:

Age: Most lenders require the mortgage to be paid off before you reach 70-75
Existing financial commitments: Outstanding loans, credit cards, or other debts
Monthly expenditure: Regular outgoings and lifestyle costs
Property type: The kind of property you’re looking to buy

Meeting these requirements puts you in a stronger position to secure a competitive 5-year fixed rate mortgage. However, requirements can vary significantly between lenders, so it’s often beneficial to consult with a mortgage broker who can help find the most suitable options for your circumstances.

How to apply for a fixed rate mortgage

Applying for a 5-year fixed rate mortgage in the UK requires careful preparation and understanding of the process. Here’s a comprehensive guide on how to successfully apply for a fixed rate mortgage.

Check your eligibility and prepare documentation

Before submitting your application, ensure you meet the basic eligibility criteria and have all necessary documents ready:

Proof of identity (passport or driving license)
Proof of address (utility bills or bank statements)
Last three months’ bank statements
Last three months’ payslips
P60 form from your employer
Two years’ accounts if self-employed
Proof of deposit

Review your credit score

Your credit score plays a crucial role in mortgage approval. While there’s no universal minimum score requirement, a higher credit score increases your chances of securing better rates. Most UK lenders prefer applicants with good credit histories, typically considering scores above 700 with Experian as favorable.

Calculate affordability

Lenders typically offer mortgages based on income multiples, usually between 4.5 to 5 times your annual income. Consider these factors when calculating affordability:

Your annual income (including bonuses and overtime)
Monthly outgoings and existing debts
Proposed mortgage payment amount
Future interest rate changes

Save for your deposit

The size of your deposit significantly impacts the mortgage rates available to you. Current market conditions show that larger deposits typically secure better interest rates:

Minimum deposit: 5% of property value
Recommended deposit: 10-15% for better rates
Optimal deposit: 20% or more for best available rates

Choose a mortgage provider

Research different mortgage providers and their current offerings. Consider factors such as:

Interest rates and fees
Customer service reputation
Flexible payment options
Early repayment charges
Overall lending criteria

Submit your application

Once you’ve chosen a lender, the application process typically involves:

Initial consultation with the lender or mortgage broker
Mortgage in Principle application
Full mortgage application submission
Property valuation
Final offer and completion

Consider working with a mortgage broker who can access exclusive deals and guide you through the application process, potentially improving your chances of approval and securing better rates.

Post-application considerations

Maintain regular employment during the application process
Avoid taking on new debt
Keep all relevant documents accessible
Respond promptly to any additional information requests
Review the final mortgage offer carefully

Best 5 Year Fixed Rate Mortgages UK: Complete Guide 2024