2 year fixed mortgages
Learn all about 2 year fixed rate mortgages, and how to find the best 2 year fix
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.
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
2 year fixes are usually cheaper than longer term fixed mortgages
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.
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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