Should I Choose a Two or Five-Year Fixed Mortgage?

couple moving into property with fixed rate mortgage

Navigating the property market can be a complex journey, especially when it comes to the numerous mortgage options available. Two of the most popular choices, are two-year and five-year fixed-rate mortgages. With higher interest rates currently in mind, let’s explain each option so you can make the best decision for your financial future.

What Are Fixed-Rate Mortgages?

Fixed-rate mortgages provide stability by locking in a specific interest rate for a set period, be it two, five or more years. This means your monthly mortgage payment remains the same for that duration, protecting you from unexpected hikes in interest rates.

Two-Year Fixed-Rate Mortgages


  1. Flexibility: This option provides flexibility, allowing you to reassess your financial situation in a shorter time frame. It’s an excellent choice for those who anticipate changes in their personal or financial circumstances.
  2. Stability: Repayments will remain the same for two years, giving you both certainty and stability.
  3. Confidence – If interest rates continue to rise, you won’t be affected and are also likely to pay less than you would on a variable rate deal.

Five-Year Fixed-Rate Mortgages


  1. Long-term Stability: By fixing your rate for five years, you’re shielded from interest rate fluctuations for a longer period. It’s an ideal option for those looking for predictability in their financial planning.
  2. Time and Cost Saving: With a longer fixed period, you avoid the need to remortgage frequently, saving time and potentially reducing associated fees.
  3. Confidence: If interest rates continue to rise, you won’t be affected and are also likely to pay less than you would on a variable rate deal.


Two or Five-Year Fixed-Rate Mortgage Cons:

  1. Potential Future Rate Drops: If interest rates decrease, you won’t be able to benefit from lower repayments while you’re fixed.
  2. Less Flexibility: If your circumstances change or if interest rates fall, you might find yourself locked into a less favourable rate.
  3. Early-Exit Fees: If you want to pay off or switch your mortgage, you are likely to face an early redemption charge (ERC). This can cost thousands of pounds, so if you’re taking out a fixed-rate mortgage, be sure you’re going to stick with it for the duration of the deal.

Considering Higher Interest Rates

With the Bank of England indicating the possibility of higher base rates into 2024, this could influence your decision. Although we have seen a minor drop in fixed-rate deals over the last week or two (August 2023), with base rates looking likely to continue increasing, fixing into either a two or five-year deal now could be the best financial solution for you.


Choosing between a two-year or five-year fixed-rate mortgage is a decision that requires careful thought and consideration of your individual needs, goals, and the economic landscape.

  • For Stability Seekers: If you value stability and wish to guard against potential further interest rate hikes, a five-year fixed-rate mortgage may be your best option.
  • For the Flexible Borrower: If you seek flexibility and are willing to navigate the potentially changing interest rates, a two-year fixed-rate mortgage might suit you best.

In both cases, consulting with a financial adviser or mortgage broker, who understands the current market, can help by providing tailored advice for your unique situation. Ultimately, the right decision is the one that aligns with your personal circumstances and long-term financial goals.

If you’d like further advice on fixed-rate mortgages, or help finding an alternative mortgage option, contact once of our friendly advisors now.


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