Two-year fixed rates
Two-year fixes are the most popular choice in the UK, and they usually come with the lowest starting rates. They suit people who want to look at their options again fairly soon, maybe because they expect to move, plan to pay off a big lump, or reckon rates could fall.
The downside is remortgaging every two years. That brings arrangement fees, sometimes a valuation cost, and the time it takes to compare deals. Over a 25-year mortgage those costs mount up. You also meet rate changes more often, and that can fall either way for you.
A two-year fix makes the most sense when rates are falling or hard to call, or when your own situation might change before long. If steady payments matter most to you, a longer fix can be better value even at a slightly higher rate.
Three-year fixed rates
A three-year fix sits between the flexibility of a two-year deal and the stability of a five-year one. It is less common, but it is a fair compromise if you want a little more certainty without tying yourself in for longer.
The extra you pay over a two-year fix is usually small, and you save on remortgaging costs because you switch less often. A three-year deal looks especially good when the gap between two and five-year rates is wide, since it gives you some of the stability at a lower price.
Five-year fixed rates
Five-year fixes have become far more popular and now rival two-year deals as the most common choice. You get a longer stretch of payment certainty and fewer remortgages over the life of the loan, which keeps fees and paperwork down.
The starting rate on a five-year fix is usually 0.2 to 0.5 percentage points above the matching two-year deal, though that gap widens or narrows with the market. When rates are expected to rise, a five-year fix can even work out cheaper than a two-year one.
A five-year fix suits you if you value stability, expect to stay put for at least five years, and would rather not remortgage so often. The early repayment charges run for longer, though, so it is a weaker fit if you might sell or make large overpayments before then.
Ten-year fixed rates and beyond
A ten-year fix gives you the longest run of certainty most UK lenders offer. It stays fairly niche, but it has drawn in borrowers who want to hold a rate for a big chunk of their mortgage term, especially when rates are low.
You pay a higher rate for a ten-year fix than for shorter terms, and the early repayment charges run for the whole decade. Some ten-year products do cut or drop the ERC after five years, which gives you a partial way out if your circumstances change.
A ten-year fix suits someone with a long-term view who is settled in their home and wants payments nailed down completely. It is also worth a look if rates are unusually low right now and you want cover against big rises over the coming decade.