Common approaches to the simulation of Borehole Heat Exchangers (BHEs) assume heat transfer in circulating fluid and grout to be in a quasi-steady state and ignore fluctuations in fluid temperature due to transport of fluid through the loop. However, the dynamic responses of circulating fluid and BHEs have important implications for systems design under some circumstances. This paper presents a dynamic three-dimensional numerical model (GEMS3D) that has been developed by applying the finite volume method to simulate fluid transport and transient responses of BHEs. Consequently, short timescale dynamic behaviour of a BHE and inter-tube heat transfer between two pipes can be examined by considering the variations in outlet temperature according to a step change in inlet temperature. The effect of the On-and-Off characteristic of a heat pump, on sub-hour timescales, on outlet temperature of a BHE has also been investigated.