Compare 2 Year Fixed Rate Mortgages

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.

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.

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.

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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.

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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.

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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

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.

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?

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.

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.

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

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.

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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