What is a 2 year fixed rate mortgage?

With a 2 year fixed rate mortgage you’ll pay the same interest rate on your mortgage for 2 years.

This means that each month for 2 years you will pay the same amount for your mortgage.

When you have a fixed rate mortgage you’ll be unaffected by any changes in interest rates such as the Bank of England base rate.

You can also get longer fixed rate mortgages, such as 5 year fixed and 10 year fixed.

Should I get a 2 year fixed rate mortgage?

2 year fixes are good if you don’t want to commit to one rate for too long. 

But there are reasons for and against getting a 2 year fix. So it’s good to keep in mind the pros and cons.

Pros

  • you’ll know exactly what you’ll be paying every month for the 2 year fixed term

  • your payments won’t increase in the event that interest rates go up during your fixed period

  • a 2 year fix is a good option if you plan to move house or remortgage in about 2 years

  • 2 year fixes are usually cheaper than longer term fixed mortgages

Cons

  • you won’t benefit from interest rate cuts during your fixed period

  • fixed rate deals can often come with early repayment charges

  • you could end up paying more over the fixed period than you would if you chose a variable rate and interest rates were low

  • it’s still a relatively short term - so if you opt to remortgage after the 2 years you may have to pay more fees

Should I get a 2 or 5 year fixed mortgage?

Choose a 2 year fix if:

  • you don’t want to commit to a mortgage rate for too long

  • you want to know what you’ll pay every month for 2 years

  • you plan to stay in your property for at least 2 years but might move after this time

  • you might want to remortgage after 2 years

Choose a 5 year fix if: 

  • you want security for longer than 2 years

  • you don’t expect your financial situation to fluctuate over the course of the next 5 years 

  • you intend to live in the same property for at least the next 5 years

  • you don’t plan to remortgage within the 5 year fixed term

How to get the best 2 year fixed rate mortgage

When looking for the best 2 year fixed rate deal you should consider all the costs involved.

Low interest rates

The best 2 year fixed rates will have lower interest rates. But these lower interest rates are usually only on offer to those who put down a larger deposit.

If you put down at least a 20% deposit you’ll be able to access a wider variety of deals with better rates.

Fees

When looking for the best 2 year fixed rate deal you should always keep an eye on the fees.

Mortgages are complicated financial products with lots of different fees and charges. 

In particular, look out for a setup fee or arrangement fee which can be up to £2,000 and is often around £1,000.

And if you remortgage or move house during the 2 year fixed term, you may have to pay an early repayment charge.

If you remortgage every 2 years these fees can really add up.

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Your home could be repossessed if you don't keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

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