Best 2 Year Fixed Rate Mortgage

What is a two-year fixed rate mortgage?

A two-year fixed rate mortgage holds the same interest rate for the first two years, regardless of what happens in the market or how the lender may adjust its other interest rates.

Because the interest rate is fixed, this means the monthly mortgage payments will stay the same for the two-year period.

Is a two-year fixed mortgage a good idea in 2025?

Two-year mortgages are a popular choice for many borrowers, offering the peace of mind that comes with a fixed rate combined with greater flexibility for those who don’t want to be locked in for too long should interest rates fall.

Overall, fixed mortgage rates have declined over the past year, driven by multiple cuts to the Bank of England base rate in 2025. This means some borrowers may prefer to opt for a shorter-term fix (like a two-year deal) in the hope that rates will be lower when the fixed term ends and they’re ready to remortgage.

However, global economic uncertainty can make it difficult to predict how lenders will reprice their deals going forward, which means interest rates could rise. So, whether a two-year fixed mortgage is a good idea will ultimately come down to your preferences and individual situation.

Who is a two-year fixed rate best suited for?

Generally, a two-year fixed mortgage is best suited to borrowers who want to lock in interest rates and fix their monthly payments, but without the longer-term commitment of a three- or five-year fixed deal.

If you’re on the fence about whether this type of mortgage is for you, make sure to consider the following:

What fees can I expect?

The main cost associated with any fixed rate mortgage is the product fee – this can refer to the arrangement, booking or reservation of the mortgage as charged by the lender and usually costs around £1,000 (though this can vary).

What’s more, if you apply for a deal through a mortgage broker, you may also need to pay a broker fee. Aside from this, there are the general costs of buying or moving home to consider, including valuation costs, legal fees and Stamp Duty, however, some of these expenses can be covered as incentives on certain deals.

Can I overpay or make extra repayments?

Overpaying can be a good way to reduce the overall cost of your mortgage by reducing the amount of interest owed, however, it’s important not to increase your payments by too much as this often incurs an early repayment charge (ERC).

Lenders tend to have an allowance of how much you can overpay a fixed rate mortgage by each year before having to pay an ERC. As long as this limit isn’t exceeded, you should be able to make either a one-off lump payment or increase your monthly contributions whenever you like, without having to pay any extra fees.

Do I need a big deposit for a two-year fix?

As with other fixed mortgage terms, a two-year fixed deal can cater for a range of deposit sizes outlined by its loan-to-value (LTV). For example, a mortgage offering a 60% maximum LTV can loan enough funds to cover 60% of the value of the property you’re buying or remortgaging, meaning you’d need to cover the remaining 40%.

As a result, you’ll tend to find deals with lower LTVs charging more favourable rates, so having a larger lump sum upfront is likely to save you money on your mortgage.

How do two-year fixed mortgage rates compare to five-year or variable?

Five-year fixed mortgage rates are typically more expensive than two-year fixed mortgage rates to reflect the increased risk of lending money for longer periods. However, market volatility means this may not always be the case. For example, following the “mini-Budget” in September 2022, two-year fixed deals became more expensive than their longer-term equivalents. This situation continued until 2025, when five-year fixed rates once again dipped back below two-year fixed rates.

Unlike fixed rate mortgages, the interest rate on a variable mortgage can change which means borrowers will always be at the mercy of the lender should it decide to hike its prices. While the gamble of these mortgages could pay off and lead to lower costs overall, also take into account that your payments are likely to change each month (and could increase), which can make it harder to budget your money.

What happens when the two-year fixed term ends?

If you’re approaching the end of a two-year term, your lender should contact you several months beforehand. You can then choose what happens next.

If you choose to take no action after your two-year term comes to an end, you’ll typically be transferred to your lender’s Standard Variable Rate (SVR). This tends to be much higher than the fixed price you were previously paying and could see your monthly payments rocket.

As the end of your term nears, you could begin searching for a remortgage deal. These mortgages are likely to work out cheaper than remaining on your lender’s SVR and, using any built-up equity from your original term, you should be eligible for remortgage deals at a lower loan-to-value (LTV) which tend to charge lower rates.

Depending on how interest rates have changed since you initially took out the original mortgage, this could land you a better deal to help bring down your monthly payments. To give yourself enough time, it’s worth beginning your search for a remortgage deal around six months before your term is due to expire.

Finding the best two-year fixed rate mortgage

Fortunately, when searching for the best two-year fixed rate mortgage, UK borrowers have plenty of options to consider. Many will be driven primarily by finding the best rate, which is determined by the size and value of the property, as well as your credit score and the size of your deposit.

Generally, the more money you can put down for a deposit, the better your mortgage rate will be, since you present less of a risk to the lender.

Bear in mind that while some of the lower priced two-year fixed rate mortgage rates may look very appealing, they can come with an expensive arrangement fee, which can sometimes undo any benefit you would enjoy from the lower rate.

It could also be worth working out how much you will be charged at the beginning and end of your mortgage before applying, including any ERC or cancellation charges, just in case.

Should I fix my mortgage for two years?

This is up to you as it depends on your individual situation and preferences, as well as what you think will happen to mortgage rates over the coming years.

If you think rates will fall, you may favour a two-year fixed mortgage so you can take advantage of lower rates once the fixed term ends (although it’s not a guarantee that you’ll be able to find a cheaper deal). However, if you prefer to have peace of mind that your mortgage payments won’t change and want to protect yourself in case interest rates rise, it may be worth considering a longer fixed term.

It's often a good idea to speak to a mortgage broker as they will be able to provide tailored advice on your situation and requirements, helping you to find the right mortgage for you.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

Speak to an award-winning mortgage broker today