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Two years or five? The real cost of each, side by side
A two-year fix is cheaper today. A five-year fix is cheaper if rates go the wrong way. Here's the comparison drawn out in full — payments, capital repaid, and the one rate that decides which of them wins.
If your fix is ending in the next six months, this is probably the only question keeping you up: short or long? It gets argued about as though one answer is simply correct. It isn't. The two products are priced to do different jobs, and the right one depends on something nobody knows — where rates sit when the short deal runs out.
What we can do is make the trade-off visible. Below is the same mortgage taken down two different roads for five years, with every pound accounted for: what you hand over each month, and what you still owe at the end. Pick a view on rates and watch the two totals move.
Put in your own balance, remaining term and the two rates you've been quoted. Everything below — the comparison, the break-even rate and both charts — updates as you type.
The one number that settles it
Somewhere between “rates fall” and “rates rise” the two roads cost exactly the same. On this example, that point is here:
Remortgage in 2028 below and the two-year fix was the better buy. Above it, the five-year fix was — and the further above, the more it saves you.
What it feels like month to month
Totals are one thing; your standing order is another. The five-year fix draws a flat line for sixty months. The two-year fix draws a lower line, then a step — up or down — that you don't get to choose the size of.
The shaded gap is the difference between the two payments: solid tint where the two-year fix is cheaper, hatched where it costs more.
Three things the arithmetic can't price
Fees, twice over
A two-year fix means arranging a mortgage twice as often. Product fees, valuations and legal work land again in year two — often £1,000 or more, which quietly eats a chunk of the monthly saving.
Who you'll be in five years
Moving house, letting the place out, splitting up, paying off a lump sum — a long fix is portable in theory and awkward in practice. If life is likely to change shape, an early repayment charge is a real cost, not a footnote.
What a bad month costs you
If a £250 rise would genuinely hurt, the five-year fix is buying insurance, not chasing a saving. Paying a little more for a payment you can't be surprised by is a perfectly rational trade.
Which tends to fit whom
| Your situation | Usually points to | Because |
|---|---|---|
| Payments already tight | Five years | Certainty is worth more than the last £30 a month |
| Might move within three years | Two years | Keeps you clear of early repayment charges |
| Expecting income to rise sharply | Two years | A better loan-to-income ratio may unlock better rates in 2028 |
| Nearly through the mortgage | Either | Small balance means rate differences move little money |
| Big lump sums planned | Check the small print | Overpayment allowances matter more than the headline rate |
Questions people actually ask us
How early can I lock in a new rate?+
Most lenders let you reserve a deal up to six months before your current one ends. If rates fall in the meantime you can usually swap to the cheaper one before completion, so booking early is close to a free option.
Is a three-year fix a sensible compromise?+
Sometimes, though the choice of lenders is thinner and pricing is often closer to the five than the two. Worth comparing on the same total-cost basis rather than on the headline rate.
What if I do nothing when my fix ends?+
You roll onto your lender's standard variable rate, which is typically far above any fixed deal on the market. It is almost always the most expensive road of all — and the easiest one to end up on by accident.
Does the lowest rate always mean the lowest cost?+
No. A £1,495 product fee on a small balance can outweigh a 0.15% rate saving, and adding the fee to the loan means paying interest on it for years. Always compare total cost over the deal period.
No pressure — but if you'd like a second pair of eyes
If you'd rather talk it through with someone than squint at a chart, that's what we're here for. Send us your current deal and end date and we'll tell you plainly what your options look like.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
Quick Mortgages is authorised and regulated by the Financial Conduct Authority (FRN 841262— insert your reference). The figures in this article are illustrative, assume a capital repayment mortgage and exclude product, valuation and legal fees. They are not a quotation or personal recommendation. Your own rate will depend on your circumstances, credit profile and loan-to-value.
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Disclaimer:
This article is for general guidance purposes only and does not constitute legal, financial, or professional advice. Mortgage products and their terms can vary, and it is important to seek advice from a qualified, regulated professional who can assess your individual circumstances. Please ensure you consider your unique needs before making any financial decisions.
While every effort is made to ensure that the information provided on this blog is accurate and up-to-date, we do not guarantee its completeness or accuracy. The mortgage market can change rapidly, and the information on this blog may become outdated. We recommend verifying any information before acting on it and seeking tailored advice.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
