Should You Get a 2 or 5 Year Fixed Mortgage?

Buying your first home is an exciting milestone, but it comes with big financial decisions. 

The typical first-time buyer in the UK today pays around £311,000 for a starter home and puts down roughly £61,000 as a deposit (source)

That leaves a large mortgage to repay, so securing a good interest rate is crucial. Even a small difference in the rate can change your monthly payment by tens or hundreds of pounds. 

Many first-time buyers are currently eyeing homes like these while navigating the tricky decision of how long to fix their mortgage rate. 

With home prices high and interest rates in flux, picking between a short 2-year fix or a longer 5-year fix mortgage can significantly impact your budget.

Below, we break down everything you need to know about a 2 or 5 year fixed mortgage and the advantages of each, so you can make an informed decision.

2-Year vs 5-Year Fixed Mortgages: What’s the Difference?

A fixed-rate mortgage means your interest rate (and monthly payment) is locked in for an agreed period. 

The main difference between a 2-year and 5-year fixed mortgage is how long the rate is guaranteed.

With a 2-year fix, you get a stable rate for two years; with a 5-year fix, you’re guaranteed the same rate for five years.

During the fixed period, your rate won’t change at all, no matter what happens to the Bank of England base rate or the economy; your mortgage payment remains the same each month.

After the fixed term ends, you don’t automatically stay on that low rate. Once the 2 or 5 years are up, the loan typically reverts to your lender’s standard variable rate (SVR), which is usually much higher.

For example, at the end of 2024, the average SVR was about 7.85%, far above typical fixed deals around 4-5%.

In practice, most people will look to remortgage or switch to a new deal when their fix expires, to avoid paying such high interest on the SVR. 

This means if you take a 2-year fix, you should be prepared to line up a new mortgage deal after two years. With a 5-year fix, you don’t have to worry about remortgaging for much longer.

Do The Interest Rates on a 2 or 5 Year Fixed Mortgage Differ?

The interest rate offered for a 5-year fix can differ slightly from a 2-year fix. 

In normal times, shorter fixes often come with a slightly lower rate because the lender is only guaranteeing it for a short period. 

Longer fixes historically charged a bit more for the security of a long lock-in. However, this isn’t always the case – in fact, recently, some five-year deals have been cheaper than two-year deals.

Towards the end of 2024, the lowest five-year fixed mortgage rates were around 4.1%, compared to roughly 4.5% for the lowest two-year deals (source)

This unusual situation happened because markets expected interest rates to fall, so lenders were willing to offer better pricing on longer terms. 

As of mid-2025, average rates for both 2-year and 5-year fixes are roughly the same (around 4.5% at 75% loan-to-value), though at very high loan-to-value (small deposit), five-year fixes can even be slightly cheaper than two-year ones.

Advantages of a 2-Year Fixed Mortgage

More flexibility in the short term

A 2-year fixed mortgage is a shorter commitment. After two years, you have the freedom to reassess your situation. This is ideal if you might move home soon, expect a salary increase, or plan to overpay as you won’t be locked in for long. 

It’s also useful if you’re a first-time buyer who might upgrade to a bigger property in a couple of years; with a 2-year deal, you can switch mortgages without long early repayment penalties once the term is up.

Benefit sooner if interest rates fall

If you suspect that interest rates will drop in the near future, a 2-year fix lets you take advantage of those lower rates relatively quickly. 

You’re essentially betting that in two years, mortgage deals will be cheaper so you can refinance at a better rate.

Often slightly lower initial rates

In many market conditions, 2-year fixed deals have slightly lower interest rates than longer fixes. You’re not paying for as much long-term security, so the upfront rate can be a bit cheaper.

Do note, however, as mentioned earlier, in late 2024 and 2025, this trend flipped and some 5-year rates have been just as low or lower – it really depends on the economic outlook at the time.) 

But historically, if you compare similar mortgages, the 2-year option might save you a little in interest in the short run.

Smaller early repayment charge window

Fixed mortgages typically carry an early repayment charge (ERC) if you exit the deal before the term ends. 

With a 2-year fix, you only have this penalty hanging over you for two years. After that, you’re free to switch or pay off the loan without penalties (aside from any exit fee).

Advantages of a 5-Year Fixed Mortgage

Long-term payment stability

The clear benefit of a 5-year fix is peace of mind for a much longer period. You lock in your interest rate for half a decade. 

That means five years of knowing exactly what your mortgage payment will be each month. This stability can be a huge relief, especially for first-time buyers stretching their budgets.

Protection against rate rises

If interest rates rise further in the next few years, a 5-year fixed mortgage shields you from those increases. 

In periods of uncertainty or when rates are expected to go up, fixing for longer can save you a substantial amount of money. You essentially insure yourself against the risk of rising rates.

Less frequent remortgaging (lower hassle)

With a 5-year fix, you don’t need to remortgage as often. This means fewer arrangement fees over time and less time spent switching deals. 

You’re set for five years, which can be convenient, especially if life gets busy (starting a family, new job, etc.).

Also, if your circumstances change negatively (say you lose your job or have a dip in income), you won’t have to worry about qualifying for a new mortgage as soon, since your deal lasts five years.

Should You Get a 2 or 5 Year Fixed Mortgage?

To sum up, there’s no one-size-fits-all answer. 

If you expect falling rates and want the flexibility to jump on them, and you’re comfortable with a bit more uncertainty, a 2-year fixed mortgage could be the right choice. 

If you prefer stability in your payments, worry about rates rising, or simply don’t want the hassle of frequent remortgaging, a 5-year fixed mortgage may suit you better. 

Many first-time buyers actually find the 5-year fix is worth it for the peace of mind, as you can just set it and focus on enjoying your home.

But every situation is different, so carefully weigh the pros and cons (and consider speaking with a mortgage adviser) before deciding.

Frequently Asked Questions

What happens when my fixed-rate mortgage period ends?

When your 2-year or 5-year fixed term ends, your mortgage will typically revert to your lender’s standard variable rate (SVR) by default.

Can I change or end my fixed mortgage early?

You can, but it might be expensive. Ending a fixed-rate mortgage before the term (for example, selling your home or remortgaging to a new deal early) will likely incur an early repayment charge (ERC).

Are other fixed-term mortgages available?

Yes. While 2-year and 5-year fixes are the most common, many lenders also offer 3-year and 10-year fixed-rate mortgages, and occasionally other lengths (some even have 7-year or 15-year deals).

What is the difference between a fixed-rate and a variable rate mortgage?

A fixed-rate mortgage guarantees your interest rate for a set period (2, 5, or even 10 years), so your payments are stable. A variable-rate mortgage means the rate can change over time.

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.