Best 3 Year Fixed Rate Mortgage

How do three-year fixed rate mortgages work?

A three-year fixed rate mortgage, as its name suggests, holds the same interest rate for the initial three years of your mortgage, even if your lender changes its prices during this period. See below for a step-by-step guide on how these products work.

Work out how much you need to borrow – If you’re buying a house, first calculate how much you can set aside for an initial deposit based on your budget, which will leave you with an amount you need to borrow for your mortgage.

Compare rates – Next, compare the latest deals on the chart above. You can use our mortgage repayment calculator to get an idea of what your monthly payments could look like. Remember to look beyond the lowest rates and consider all aspects of a mortgage to ensure it matches your requirements. This could include upfront product fees or what incentives come packaged with the deal.

Get a Decision in Principle – Once you have selected a deal, you’ll need to apply for a Decision in Principle. While not a formal offer, this acts as a confirmation of how much the lender is willing to offer you, and will require details on your income, credit history (soft check) and other outgoings. You’ll also need to provide an address history and your National Insurance number.

Apply for your mortgage – Once you’ve had an offer accepted on a property, you can use your Decision in Principle to apply for your mortgage. After presenting the required documentation, you can then submit your application.

What happens at the end of the term – After the three years is up on your mortgage, you then have a couple of choices of what to do next. One option is to simply do nothing, in which case your lender will usually move you to its Standard Variable Rate (SVR). However, this is likely to be much higher than the fixed rate you were previously on, which in turn will push up your monthly payments considerably. As a result, most borrowers tend to remortgage instead at the end of their fixed period, which can help keep repayments at similar levels.

How does a three-year fixed rate mortgage term compare with other terms?

What is the average three-year fixed rate right now?

As of September 2025, the average rate for a three-year fixed mortgage is around 4.90%, however, this figure is constantly shifting as lenders make changes to their product ranges. You’ll find this average is often lower compared to that of a two-, five- and even 10-year mortgage, though this is because there are fewer three-year deals available on the market.

You can check how up to date the listings are above by viewing where it says ‘Last updated’ in the top right-hand corner of the chart.

How about the lowest three-year rate?

Traditionally, the longer the term, the higher the rate, as lenders account for the increased risk of lending money for extended periods. Therefore, the cheapest three-year fixed prices tend to sit in the middle when compared to the lowest two- and five-year fixed rates.

This being said, a combination of economic factors has warped this idea in recent years, so it’s a good idea to check the latest deals when deciding which term is right for you, which can be done using our charts.

Should I fix my mortgage for three years?

Whether you should fix your mortgage for three years will largely depend on the wider economic environment, as well as your personal circumstances. It’s therefore useful to consider the following factors:

• Guaranteed rate – A three-year fixed rate mortgage keeps its rate the same for the duration of its term, which could offer you greater financial security compared to a shorter two-year deal as your payments won’t change for longer. This could help you better budget your money and give you more time to save towards remortgaging when the time comes.
• Will your circumstances change? – On the other hand, it’s important to think about how your financial situation could change over the next three years before applying for this type of mortgage. Deciding to move house, for example, will usually mean either remortgaging or porting your current deal which could lead to higher payments and additional fees, so doing this towards the end of the term could help minimise any early repayment charges (ERCs).
• A good mix of flexibility – Longer fixed mortgage terms can be a doubled-edged sword. While locking in the same rate for extended periods can protect borrowers from rate hikes, it can also mean losing out on lower payments should the market bend the other way, making shorter-term deals more appealing. Three-year mortgages can therefore offer a good compromise for those unsure of how rates will change without a long-term commitment.

When is the best time to choose a three-year fix?

The best time to choose a three-year fix will ultimately depend on your individual situation, though there are times when three-year fixed mortgage rates are expected to be lower.

A cut to the base rate, for instance, such as after a base rate reduction as lenders collectively reprices deals. A reduction to the UK’s central interest rate is determined through a range of factors but is often used to help control inflation. If inflation spikes, you may find the base rate is kept high to limit spending in the UK and vice versa.

However, trying to anticipate when interest rates will fall can be difficult and not always a foolproof plan, especially if it means delaying plans or staying with a lender’s costly Standard Variable Rate (SVR) while you wait.

It’s also worth noting that three-year mortgages are considered a more niche product compared to some of the other fixed terms available, and as such, you’ll find fewer of these deals being offered by lenders. This being said, the number of three-year deals has been on the rise more recently and has increased sixfold from 107 in September 2020 to 642 as of the start of September 2025.

As Oliver Dack, Spokesperson at Mortgage Advice Bureau, points out:
“Those torn between the flexibility of a shorter-term initial fixed term and the security of a longer-term fix could explore a three-year fixed mortgage; this is a corner of the market we’re seeing become all the more competitive.”

Who is a three-year fixed mortgage best for?

• Three-year mortgages are typically most suited to people looking to have certainty over their mortgage repayments for the medium-term. If you’re on the fence about whether a three-year fixed mortgage is the best option for you, it can be useful to work out your priorities.
• One of the main positives of any fixed mortgage term is the peace of mind of having fixed repayments each month. As explained in the sections above, locking in rates for longer periods extends this peace of mind, though it can also shackle you to higher prices if rates later fall across the market, so a three-year deal may provide a good middle ground.
• Nevertheless, as with any mortgage, you’ll want to make sure that your credit rating is as good as it can be alongside whether you can afford the repayments, as this will influence a lender’s decision when deciding if you are eligible for their product. Keep in mind that if you apply for a mortgage and get rejected, your credit rating will likely be negatively affected, so it’s worth making sure your finances are in order before applying.

Three-year fixed rate mortgage case studies

Case study 1

Emma and Jack are looking to buy their first home together and need to borrow £200,000. Knowing that they want to go for a fixed rate mortgage over a term of 35 years, the couple are stuck between a five-year fix at 4.30%, or a three-year deal priced at 4.40%.

Using our mortgage repayment calculator, the five-year deal could see the couple paying £921.17 each month, which works out cheaper than the three-year deal at £934.17 and could protect them for longer should interest rates rise. However, the couple are planning on starting a family and want to move to a bigger house in a few years; this could leave them with a hefty Early Repayment Charge (ERC) if they try to pay off the five-year deal early, on top of all the other costs associated with moving home and securing a new deal.

In this case, Emma and Jack settle on a three-year mortgage, allowing them to lock in their monthly repayments around their big life decisions. This way, by the time the couple are starting to think about moving to a bigger home, most of the fixed term will have already passed, giving them more flexibility to find a new deal without having to worry about paying too much in ERCs.

Case study 2

Having paid off their mortgage, Simon and Allison are looking to move to a larger home. As they’ve already paid off their current deal, they’re able to sell their home for £200,000, meaning they still must borrow £300,000 to afford the new property which is valued at £500,000.

With this sizeable 40% deposit, this allows the couple to access deals at a lower loan-to-value (LTV), and they narrow down their choice to either fix rates for two years at 3.80% or for three years at 4.00%, both over 20 years. The former would see the couple repaying £1,786.48 each month, £31.46 less compared to the three-year deal at £1,817.94. However, Simon and Allison may still decide to apply for the three-year fixed mortgage if they believe prices won’t have dropped far enough after a shorter two-year term, and in this case would be happy to pay the higher monthly cost.