Compare the best 3 Year Fixed Rate Mortgages

On this page:

1. What is a 3 year fixed rate mortgage?
2. Should I fix my mortgage for 3 years?
3. Who is a 3 year mortgage for?
4. Advantages of a 3 year fixed rate mortgage
5. Disadvantages of a 3 year fixed rate mortgage
6. How to find the best 3 year fixed rate mortgage
7. Alternatives

What is a 3 year fixed rate mortgage?

A three fixed rate mortgage is, simply, a mortgage that keeps the same interest rate for the first 3 years that you have it, no matter how much the lender raises or lowers its rates of interest. After the initial period of 3 years, the interest you pay will transfer to your lender's standard variable rate (SVR). Fixed rate mortgages can last for a little as 2 or as much as 10 years, but on this page, we will be looking at mortgages 3 year mortgages only.

Should I fix my mortgage for three years?

If you fix your mortgage for 3 years then your monthly payments will not change for the duration of your 3 year introductory term. Variable mortgage types can increase their rates any time, which will increase the amount you need to pay your lender. If you find a good rate on a 3 year mortgage, you can commit to spending only the fixed amount for 3 years before your lender is allowed to change your rate. This can be offer peace of mind since you don't need to worry about rising rates. However, if mortgage rates go down, you will still be required to pay the fixed amount you agreed with your lender!

Who is a 3 year fixed rate mortgage for?

To put it simply, three year mortgages are most suitable to people who would find it hard or impossible to successfully make their mortgage payments their lenders rates were to increase within the next 3 years. Other fixed terms are available, from as little as 2 years, to as much as 5 or 10 years.

Advantages of a 3 year fixed rate mortgage

A longer period of repayment security can be gained by choosing a longer term fixed rate. As well as security, with a longer term fixed rate you do not need to search for a new mortgage every year, and pay the fees associated with a new mortgage, as you might do with a shorter term fixed mortgage such as a 2 year mortgage. Additionally, if a 3 year term will allow you to reasses your mortgage after three years, whereas a 5 or 10 year mortgage would require you to wait for longer.

Disadvantages of a 3 year fixed rate mortgage

The risk with a longer term fixed rate is that if mortgage rates drops, you could end up paying over the odds. In the current low-rate environment, this is not a large risk, but in this situation you may decide you want to change your mortgage before completing the initial fixed rate term to save money. Fixed rate mortgages usually charge a fee if you want to change or repay your mortgage early, thereofre it's wise to keep these charges in mind when you are deciding which longer term fixed rate mortgage to take. These charges may be prohibitively expensive, particularly in the early years.

When you look at our best buys, you'll see that we have selected the best 3 year fixed rate mortgage deals from across different loan-to-value tiers in order to give a better overview of what's available.

If you can't find a product that's right for you, don't worry - try our quick and easy mortgage search to access a fully comprehensive list of all mortgages.

Finding the best 3 year fixed rate mortgage

If you've decided that a three year term fixed rate mortgage is for you, there's still plenty of options to consider. Primarily;

The mortgage rate

This is determined by the size and value of the property, as well as your credit score and the size of your deposit. Generally, the more money you can put down for a deposit, the better your mortgage rate will be, since you present less of a risk to the lender.

Keep an eye out for fees! Some of the lower priced 3 year fixed rate mortgage rates may look very appealing, but they can come with an expensive arrangement fee, which can sometimes undo any benefit you would enjoy from the lower rate.

Fees and other charges

As always, read the small print! Always sit down and work out how much you will be charged at the beginning of your mortgage, and when your mortgage ends. It's also worth discovering how much you will be charged if you have to cancel - even if you never do it, it's better to be prepared. Work out the full cost of your mortgage including all fees when you compare.

Shorter and longer fixed rate periods

You may find that the introductory rate on a short-term fixed rate mortgage is lower than that of a 3 year fixed rate mortgage, or if you choose a variable rate mortgage. Additionally, you'll find the introductory rates on the 5 to 10 year mortgages are slightly higher - you might consider this a small price to pay for the security of knowing what your mortgage rates are going to be for several years. Compare the best buy charts of these fixed rate mortgage and variable mortgages:

• Two year fixed rate mortgages
• 5+ year fixed rate mortgages
• Variable rate and tracker mortgages