The 5yr fix is insurance against rate rises. Solve for the break-even rate in year 3+ to know which way to bet.
If years 3-5 are above 3.90%, the 5yr fix wins. Current 5yr rate: 4.20%.
The two options are close on cost. The decision becomes about how much certainty you want; either is defensible. If you'd lose sleep over a sharp rate rise in 2027, the 5yr is the simpler choice.
Simplified: interest-only cost stacked across the fix period, one product fee per remortgage. Doesn't model amortisation, early redemption charges, or any actual rate path. Use as one input, not the answer.
Worth surfaces the break-even rate against your actual balance and the live market each renewal. Join the waitlist.
Typical ERCs slide from 5% in year 1 to 1% in the final year of the fix. On a £350k balance with a 5yr fix, a year-3 sale could cost £10k+ in ERCs, that can wipe out the rate saving. If there's a real chance you'll move or pay down meaningfully, factor ERCs in before locking a long fix.
Trackers float with base rate. Good if you have a view that rates will fall and you can re-fix cheaply later, or if you'd benefit from flexibility (planned overpayments, a sale on the horizon). UK long-run shows fixed rates have usually won during rising-rate cycles, but the trade-off is real.
Because principal repayment doesn't change between the two options at the same outstanding balance, so it cancels out. The only real difference is interest cost over the comparison window, plus fees, plus your assumption about year 3-5 rates.