Question:

Is there a 5 year fixed rate mortgage?

Answer:

Yes, there is. The 5 year fixed rate mortgage is common in the UK where the rate will stay low for a period of 5 years and will then adjust. It is advertised as a fixed rate mortgage but it is in fact an ARM with a single rate adjustment to the Standard Variable Mortgage Rate in 5 years.

A 5 year fixed rate mortgage can also be obtained in Canada. In comparison to the UK and Canada, a 5 year fixed rate mortgage is not offered in the US under the same name. However, a hybrid 5/1 ARM is the closest to the British 5 year fixed rate mortgage. For both, the rate stays fixed for the first 5 years and then adjusts. However, the 5 year fixed rate mortgage in the UK will adjust only once.

The Canadian 5 year fixed rate mortgage usually allows prepayment during the first 5 years. The UK version can be more restrictive.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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