Compare 2 Year Fixed Rate Mortgages

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About 2 Year Fixed Rate Mortgages

Choosing a two-year fixed-rate mortgage provides peace of mind that your monthly mortgage repayments won’t increase for two years. Find two-year fixed-rate mortgages tailored to your circumstances by selecting the category of borrower you fit into below and answering a few quick questions.

Think carefully about securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

Information written by Tim Leonard Last updated on 12 January 2022.

Should I fix my mortgage for two years?

This will usually depend on your financial circumstances, your attitude to risk, and what you think might happen to interest rates going forward.

Fixing for two years means you won’t see any rise in your payments for that period of time. So if you’re risk-averse or a hike in your mortgage payments would leave you struggling financially, a fixed-rate mortgage can help guard against this.

How does a 2-year fixed-rate mortgage work?

A two-year fixed-rate mortgage guarantees that you’ll pay the same rate of interest for two years after your mortgage term begins. In turn, this means that your monthly repayments will stay the same for at least the next two years.

When your two-year fixed-rate period comes to an end, the rate you pay will automatically switch over to your lender’s standard variable rate (SVR), which is usually higher than the rate you fixed at. Because of this, when borrowers enter the final six months of a fixed-rate mortgage, they will often start the process of remortgaging to a new deal to try to avoid paying more.

Is a 2-year fixed-rate mortgage right for me?

A two-year fixed-rate mortgage might be suitable if you want peace of mind that your monthly mortgage payment won’t rise in the short term. In particular, it could be an option if you would find it difficult to cover a higher mortgage payment amount should interest rates rise.

If you want to protect yourself for longer, you could consider a five- or 10-year fixed-rate mortgage. However, be aware that these mortgages may have higher rates and fees. If you want to move in the near future, or think interest rates could fall, these may also be reasons for not wanting to lock in for that long.

Alternatively, if your finances would allow you to absorb any potential rise in your mortgage repayments brought about by rising interest rates, a variable rate mortgage might work for you. Their lack of rate security means variable rates are often lower than fixed rates at the start. The main risk of a variable rate mortgage is that if rates rise, any initial rate advantage that you enjoyed disappears and leaves you paying more in interest than if you had fixed. On the other hand, rates could fall and lower your repayments.

How do I choose the best 2-year fixed-rate mortgage for me?

NerdWallet’s mortgage comparison tool is a great way to find a two-year fixed-rate mortgage that might be suitable for you.

Once you’ve selected the type of borrower you are ? a first-time buyer, home mover or wanting to remortgage ? you’re just a few simple questions away from seeing a tailored list of mortgages that could meet your needs.

With the fixed interest rate, APRC and fees for each mortgage in front of you, comparing the two-year fixed-rate mortgages that you see is easy. The Annual Percentage Rate of Charge, or APRC, will give you an idea of the overall cost of the home loan – including the interest rate but also additional charges – so you can compare mortgage deals more easily. There is an estimate of how much your monthly repayments might be as well.

Can I get a 2-year fixed-rate mortgage?

There isn’t usually a shortage of choice when it comes to two-year fixed-rate mortgages, but different lenders will have different rules regarding who they will lend to.

The key to getting any mortgage is being able to prove you can afford the mortgage repayments, both now and in the future. Your credit score and having a suitable deposit or amount of equity in your home are important as well.

» MORE: What size mortgage can you afford?

What are the advantages of a 2-year fixed-rate mortgage?

  • You’ll have the security of knowing how much your mortgage payments will be for the next two years.
  • If interest rates start to rise, you’ll be protected from higher repayments during the next two years.
  • You’ll be able to budget more easily knowing what your mortgage outlay is each month.

What are the disadvantages of a 2-year fixed-rate mortgage?

  • The interest rate you’ll pay for the security of a two-year fixed-rate mortgage is likely to be higher than for a variable rate mortgage.
  • If interest rates were to fall in the next two years, you wouldn’t benefit from a decrease in your mortgage repayments.
  • If you want to remortgage when your deal ends, it won’t be long before your search for a new mortgage will need to begin – there could be fees to pay again too.
  • You might need to pay early repayment charges if you want to exit your deal before the end of your two-year term.

2 Year Fixed Rate Mortgages FAQs

What is a two-year fixed-rate mortgage?

A two-year fixed-rate mortgage allows you to make monthly repayments on your mortgage at a fixed rate of interest for a term of two years. This means repayments are guaranteed not to rise during the term, although equally it means they will not fall either.

What is a fixed-term mortgage?

A fixed-term mortgage is just another name for a fixed-rate mortgage, which allows you to fix your mortgage rate for a set period of time.

Can I get a two-year fixed-rate remortgage?

There are usually plenty of two-year fixed-rate deals available to people who want to remortgage, although you’ll need to meet the necessary affordability and credit score requirements to do so.

» COMPARE: Remortgage deals

Can I get a two-year fixed-rate mortgage with no fees?

It is usually possible to find a two-year fixed-rate mortgage that has no fees, but you can expect to pay a higher interest rate than on a similar deal where fees are charged.

» COMPARE: No fee mortgages

Are two-year fixed-rate mortgages useful for first-time buyers?

Yes, especially as new homeowners might be keen to avoid having to pay fluctuating sums of interest on their mortgage, as could happen with a variable rate mortgage.

» COMPARE: First-time buyer mortgages

Should I get a two- or five-year fixed-term mortgage?

This will depend on your preferences and circumstances.

On the one hand, a five-year fixed-rate mortgage will provide a longer period of certainty over your mortgage repayments. This would avoid the need to arrange a new mortgage, and potentially pay out more in mortgage fees, within a relatively short period of time, should you want to remortgage to a new deal.

On the other hand, fixing into a longer-term mortgage could mean having to wait longer to take advantage of lower interest rates should they fall during the five-year term. If you might need to move in the near future, fixing for a longer term, and potentially needing to pay early repayment charges to exit your deal, may not be sensible either.

You should also consider that Interest rates usually differ between two-year and five-year fixed-rate mortgages, potentially affecting the size – and therefore affordability – of the mortgage repayments you would need to make.

» COMPARE: 5-year fixed-rate mortgages

What happens after my two-year fixed-rate mortgage?

When a fixed-rate mortgage comes to an end, you will be moved to your lender’s standard variable rate. While you can stay on the SVR, most borrowers will look to remortgage to a new deal with a lower mortgage rate. Generally, the process of arranging a remortgage can begin as you enter the final six months of your fixed-rate deal.

How much mortgage will I pay off after a two-year fixed-term mortgage?

This will depend on the size of your mortgage repayments relative to your loan amount and the amount of interest you must pay. The overall mortgage term in which you intend to clear your entire debt is important too.

If you are able to overpay on your mortgage, your debt will be smaller than if you hadn’t paid extra and you’ll pay less in interest over the entire term of your mortgage.

» MORE: How much could overpaying on your mortgage save you?

Is a two-year fixed-rate mortgage cheaper than a five-year fixed-rate mortgage?

Generally, you can expect a two-year fixed-rate mortgage to come with a lower interest rate than a five-year fixed-rate mortgage, because lenders are taking on more risk by guaranteeing that your rate won’t change for a longer period of time. That said, it’s always worth checking for yourself the best two-year fixed-rate mortgages against other deals using NerdWallet’s mortgage comparison tool, before settling on a mortgage that is most suitable for you.

Is early repayment possible on a two-year fixed-rate mortgage?

Early repayment should be possible on most two-year fixed-rate mortgages, but you should always check the terms and conditions to see if you’ll need to pay an early repayment charge. Lenders use these charges as a means of dissuading borrowers from paying back too soon, and costs can be significant. Because of this, you should always think carefully before paying a mortgage back early.

What details are required for a two-year fixed-rate mortgage?

You will usually be asked to supply supporting information and documents when applying for a mortgage.

Your passport, driving licence, bank statements and utility bills can usually be used to prove your identity and address. In order to prove the mortgage is affordable, you should also be ready to supply payslips, copies of your accounts if you’re self-employed, proof of any benefits you receive, and details of your spending and outstanding debt on credit cards and loans.

» MORE: Preparing your mortgage application

Does poor credit stop me getting a two-year fixed-rate mortgage?

A poor credit rating won’t necessarily prevent you from getting a mortgage, but you could find it more challenging. If you are offered a mortgage, you might find the interest rate the lender wants to charge is higher than usual too.

It’s always worth checking your credit rating before taking out a mortgage and seeing if it can be improved before you apply. If securing an approval is still proving difficult, there are certain providers who specialise in lending to those with bad credit.

» COMPARE: Bad credit mortgages

What alternatives are there to two-year fixed-rate mortgages?

If you want to fix your mortgage rate but a two-year fixed-rate mortgage doesn’t seem right for you, there are a range of other fixed rate terms you might want to explore.

Should fixing your rate not be the option you’re looking for, a variable rate mortgage may be a better fit for you.

» COMPARE: Variable rate mortgages

About the author:

Tim draws on 20 years’ experience at Moneyfacts, Virgin Money and Future to pen articles that always put consumers’ interests first. He has particular expertise in mortgages, pensions and savings. Read more

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